Nike Joins the Crowd of Firms Leaving Russia

According to the Vedomosti daily on Wednesday, Nike (NYSE: NKE) has not renewed agreements with its largest franchisee in Russia; this marked the latest major U.S. brand to leave since the Russian military entered Ukraine.

In reaction to Moscow’s activities in Ukraine, Nike said on March 3 that all of its Nike-owned and operated stores in Russia would not operate temporarily; those that remain open are run by independent partners. According to the president of Inventive Retail Group (IRG), Nike is no longer selling items to Russia. The company manages Nike-branded stores in Russia through its subsidiary Up And Run. In a letter to staff, IRG President Tikhon Smykov said; “As supplies of goods run out, IRG will be obliged to close all of its shops under this name.”

Nike Leaves in Fear of Its Future

Due to contractual concerns, IRG claimed it could not comment on its connection with Nike. “As you can see from our stores, supplies have ceased and items are in low supply,” stated an IRG spokesman. “Under the current circumstances, we will be compelled to close mono-branded Nike locations.”

According to its website, Up and Run has 37 locations across Russia, from St Petersburg to Novosibirsk; 28 of them are still active. This month, three Nike locations, including the company’s flagship store in downtown Moscow, were open as normal. Franchise agreements with Up and Run and other franchisees A3 Sport and Yar expire on May 26, according to data from Rospatent, Russia’s patent agency.

Moreover, Nike has taken additional steps to distance itself from Russia; including discontinuing its kit sponsorship of Spartak Moscow, one of Russia’s most popular football teams; however, it dropped its second-tier squad due to financial troubles. Furthermore, Starbucks Corp (NASDAQ: SBUX) announced its exit from Russia on Monday. Following the transfer of its burger franchise to a licensee, McDonald’s (NYSE: MCD) trademark “Golden Arches” were lowered near Moscow on Monday.