The world’s most prestigious luxury companies have announced that they would temporarily suspend storefronts and halt commercial activities in Russia.
Hermes, the creator of the Birkin bag, and Richemont, the owner of Cartier, were the first to make similar announcements, followed by LVMH, Kering, and Chanel.
Since Russia’s invasion of Ukraine, which caused the United States, the United Kingdom, and the European Union to impose broad sanctions, doing business in Russia has grown more difficult.
“Given our increasing concerns about the current situation, the growing uncertainty, and the complexity to operate, Chanel decided to temporarily pause its business in Russia,” the French luxury fashion house said in a LinkedIn post.
According to a spokeswoman for LVMH, which owns labels such as Christian Dior, Givenchy, Kenzo, TAG Heuer, and Bulgari, the company will down its 124 stores in Russia on Sunday but will continue to pay the wages of its 3,500 employees in the country.
Kering, a French multinational with labels such as Gucci, Saint Laurent, Bottega Veneta, and Boucheron, has two stores and 180 people in Paris, which it will continue to support.
While rich Russians are avid buyers of luxury items, analysts claim that their share of total luxury sales is minimal when compared to the industry’s two primary growth engines, China and the United States.
Richemont, which also owns the labels Dunhill, Jaeger-LeCoultre, Montblanc, Piaget, and Van Cleef & Arpels, has a dozen directly owned stores, the most of which are in Moscow. It stated in a statement that it halted commercial operations in Russia on March 3 after ceasing business in Ukraine on February 24, the day Russia began its invasion.
Hermes had intended to establish a store in St. Petersburg later this year, adding to its three outlets in Moscow.
Russians account for roughly $9 billion in yearly luxury purchases, according to investment bank Jefferies, which is around 6% of Chinese expenditure and 14 per cent of US spending on luxury items.
Swatch Group, which owns high-end watch and jewelry brands such as Harry Winston, said it would continue to operate in Russia but would put exports on pause “because of the overall tough circumstances.”
Richemont said on Friday that it was making a “major commitment” to Medecins Sans Frontieres. L’Oreal, LVMH, and Kering have all committed financial support to help Ukrainian migrants.
(Adapted from Reuters.com)