Nike does not renew its franchise agreements in Russia, stores risk closure

US sportswear maker Nike has not renewed deals with its biggest franchisee in Russia, the Vedomosti daily reported on Wednesday, marking the latest outing by a major US brand since Russian forces entered Ukraine.

Nike announced on March 3 that it would temporarily suspend operations at all of its Nike-owned and operated stores in Russia in response to Moscow’s actions in Ukraine and said those still open are operated by independent partners.

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The head of Inventive Retail Group (IRG), which operates Nike-branded stores in Russia through its subsidiary Up And Run,
said Nike was no longer supplying goods to Russia, Vedomosti reported.

“As the supply of goods is running out, IRG will be forced to close all its stores under this brand,” Vedomosti quoted IRG President Tikhon Smykov as saying in a letter to employees.

“We started a joint venture in 2012, we lovingly built the best chain of stores in the country and found ourselves 10 years later in a situation where this business cannot exist,” Smykov wrote.

Nike did not immediately respond to a request for comment.

IRG said it could not comment on its relationship with Nike due to contractual issues.

“As you can see in our stores, deliveries have stopped and goods are in short supply,” an WRI spokesperson said. “Under current realities, we cannot continue to support the operation of single-brand Nike stores and we will be forced to close them.”

Up And Run operates 37 stores across Russia, from St. Petersburg to Novosibirsk, and its website lists 28 as still open.

Reuters visited three Nike stores this month, including its flagship store in central Moscow, which operates as
usual.

Vedomosti cited data from Rospatent, the Russian patent office, indicating that franchise agreements with Up And Run, as well as other A3 Sport and Yar franchisees, expire on May 26.

Reuters could not immediately verify this data.

Nike has made other efforts to distance itself from Russia, withdrawing its kit sponsorship for Spartak Moscow, one of Russia’s most popular football clubs, who then axed their second-tier team, citing difficulties financial.

On Monday, Starbucks Corp announced it was pulling out of Russia. Also on Monday, McDonald’s “Golden Arches” brand was lowered near Moscow, following the sale of its burger chain to a licensee.

Read more: Adidas, Nike, Puma close stores and e-commerce sites in Russia

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