German luxury fashion house Hugo Boss has sold its Russian business to Stockmann JSC, a longstanding wholesale partner, for an undisclosed fee, the company said according to a Reuters report.
This move aligns Hugo Boss with numerous Western brands exiting the Russian market in response to the ongoing war in Ukraine.
Hugo Boss had suspended its retail operations in Russia shortly after Moscow’s invasion of Ukraine in February 2022.
The company also halted its e-commerce activities and stopped all advertising in the Russian market.
Confirming the sale to Reuters, Hugo Boss said,
“We can confirm that our Russian subsidiary has been sold to Stockmann JSC – a company belonging to one of Hugo Boss’s long-standing wholesale partners in the country.”
Deal details and financial terms
While neither party disclosed the financial terms of the deal, Russian regulations mandate that foreign companies sell their assets at a minimum 50% discount.
According to Russian corporate filings, the transaction was finalized on August 2, with Stockmann JSC now owning 100% of Hugo Boss Rus, valued nominally at 40 million roubles ($470,588).
Stockmann JSC did not immediately respond to requests for comment.
Hugo Boss faced pressure from organizations like B4Ukraine, a coalition of civil society groups advocating for Western companies to cut ties with Russia.
Despite these pressures, Hugo Boss maintained that it was fulfilling its contractual obligations to its wholesale partners in Russia.
In April, the company stated,
“In terms of our wholesale business, we were fulfilling the contractual obligations to our partners. In this context, Hugo Boss is and has been complying with existing EU sanctions at all times.”
Ukraine invasion pushes many companies to pull out of Russia
Hugo Boss’s exit from Russia is part of a broader trend of Western brands leaving the Russian market due to the geopolitical ramifications of the Ukraine conflict.
In 2022, Ford Motor Company first suspended its operations in Russia and a few months later, exited the market through the sale of its 49% share in the Sollers Ford Joint Venture.
The automaker said it was “deeply concerned about the situation in Ukraine,” and noted it has “a strong contingent of Ukrainian nationals working at Ford around the world.”
Toyota also announced halting production in Russia and stopping exports to the country in 2022 in response to Russia’s invasion. The war particularly affected the company’s procurement of key materials and parts.
Last year, it was reported that the company’s St Petersburg plant may be transferred to the Russian state entity NAMI.
Others to have pressed the brakes on its Russian operations in varying capacities include Boeing and Airbus. Apple was one of the first manufacturers to halt its product sales in the country.
Airbnb too suspended operations in Russia and Belarus.
A report by Yale School of Management in January this year estimated that over 1,000 companies had publicly announced that they were voluntarily curtailing operations in Russia to some degree beyond the bare minimum legally required by international sanctions.
However, some companies continued to operate in Russia undeterred
For example, for American clothing company Guess and it has been business as usual.
Financial impact on exiting companies
A Reuters analysis published in March this year said that foreign companies which left Russia since it invaded Ukraine in 2022 lost $107 billion in the process of exiting the market.
The loss occurred due to writedowns and lost revenue because President Vladimir Putin’s regime implemented increasingly punitive measures for exiting firms, like selling their assets at a 50% discount and paying at least 10% of their sale proceeds to the federal budget.
Washington has called such payments “exit taxes”.
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