PARIS (Reuters) – Birkin bag maker Hermes and Cartier owner Richemont said on Friday they are temporarily closing Russian stores and pausing all commercial activities in the country, the first major global luxury firms to announce such a move.
Doing business in Russia has become complex since Russia’s invasion of Ukraine, which prompted the United States, Britain and the Europe Union to impose sweeping sanctions.
“It is with regret that we have taken the decision to temporarily close our stores in Russia and pause all our commercial activities from the evening of March 4th,” Hermes said in LinkedIn post. It gave no further details.
While affluent Russians are keen consumers of luxury goods, analysts say the proportion of luxury sales generated from Russian nationals is small compared to the industry’s main growth engines, China and the United States.
Richemont, which has around a dozen directly-operated stores, mostly in Moscow, said in a statement it had suspended commercial activities in Russia on March 3 after stopping Ukraine operations on Feb. 24.
Hermes, which has three stores in Moscow, had planned to open an outlet in St. Petersburg later this year.
Investment bank Jefferies estimates that Russians account for around $9 billion in annual luxury sales, which is around 6% of Chinese spending and 14% of U.S spending on luxury goods.
Swiss watchmaker Swatch Group (SIX:UHR), which owns high end watches and jewellery labels including Harry Winston, said it would continue its operations in Russia, but was putting exports on hold “because of the overall difficult situation”.
L’Oreal, LVMH and Kering (PA:PRTP) have all pledged financial support to help Ukrainian refugees and Richemont said Friday it is intiating a “significant donation” to Medecins Sans Frontieres.