Consumer Discretionary

<p style="text-align: justify;">Two big names in the global retail world, H&amp;M and IKEA, are liquidating their stocks in Russia as they close their businesses there.</p><p style="text-align: justify;">People are making long queues to take advantage of the liquidations of the latest products from the textile giants.</p><p style="text-align: justify;">Sweden-based H&amp;M and Netherlands-based IKEA halted sales in Russia after the military operation began. They are now looking to shed their clothing and furniture stock as they scale back operations there, saying that the future is unpredictable.</p><p style="text-align: justify;"><strong>Explosive Cyclogenesis in the Sector&nbsp;</strong></p><p style="text-align: justify;">ZARA SA, Oysho, Bershka, PULL &amp; BEAR, and UNIQLO have already closed all their stores, while NEW YORKER, FINN FLARE, Marks and Spencer, and MANGO were open."I will start looking for Russian brands," said Anya, an H&amp;M shopper.&nbsp;</p><p style="text-align: justify;">"A good store is leaving," said Leonid, who was "very hurt" by the closure of H&amp;M.</p><p style="text-align: justify;">Both companies are laying off staff as they scale back their business in Russia. <a href="https://www2.hm.com/en_in/index.html">H&amp;M</a> said on Tuesday that 6,000 workers would be affected and that it was working out the details to offer continued support in the coming months.</p><p style="text-align: justify;"><a href="https://www.ikea.com/in/en/">IKEA</a> has 15,000 workers in Russia and Belarus. Many workers will lose their jobs even though they have been given good dismissal conditions.</p><p style="text-align: justify;">Many Western companies decided to leave Russia after the start of the war in Ukraine.</p><p style="text-align: justify;">If you had stores in Russia that were important to your business, would you have closed them?</p><p style="text-align: justify;">This process takes months to close operations and often sell shares to Russian companies. McDonald's sold its 850 restaurants to a Russian franchise owner, who is beginning to reopen them under the name Vkusno-i Tochka.&nbsp;</p><p style="text-align: justify;">At the same time, some Western companies have stayed in Russia or are partially operating. For example, Leroy Merlin has kept its 112 stores open in Russia, while PepsiCo, Nestle and drugmaker Johnson &amp; Johnson are supplying essential items like medicine and baby formula while halting non-essential sales.</p><p style="text-align: justify;">H&amp;M has estimated at 200 million euros the cost of its departure from Russia. IKEA is seeking new local owners for its four factories in Russia and will close its purchasing and logistics offices in Moscow and Minsk, Belarus, a key ally of Russia.</p><p style="text-align: justify;">How long will it take for the sector to recover after a blow like this?</p><p style="text-align: justify;">Let us hope this ends soon.</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="https://www.linkedin.com/in/javierperezdelezaeguiguren/">Javier Perez de Leza Eguiguren</a></em></span></p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Javier Perez de Leza Eguiguren</span></h3><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What is the reason for IKEAs problems in Russia?</span></h2><p style="text-align: justify;">Ikea announced in March that it will temporarily close its stores in Russia after the country had come under international criticism for its military action and war against Ukraine.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. Apart from IKEA and H&amp;M, what businesses are closing in Russia?</span></h2><p style="text-align: justify;">Honda, Colgate, PepsiCo, Mcdonal's, Uniliver, and P&amp;G to name a few.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. What is the impact of companies closing businesses on the Russian population?</span></h2><p style="text-align: justify;">After years of life in a growing, globally connected economy, Russians find themselves in a country increasingly unplugged from the world.</p><p style="text-align: justify;">&nbsp;</p>