Adidas mulls selling its Russian business to another foreign investor or passing it to local management, Russian newspaper Kommersant reported, citing sources on the local market. One of the sources claimed that the eventual target is to relaunch the 100 most profitable stores, which have stood idle since October 2022.
Adidas rolled out plans to suspend operations in Russia in March 2022 in response to the military conflict in Ukraine. In October 2022, the company decided to pull out from Russia completely. However, Kommersant reports that Adidas is scrambling to continue some part of the Russian business. A March 20, 2023 report by JSC Adidas, the Russian subsidiary of the German company, said that management “works to mitigate the consequences of the supply chain disruptions.” In addition, JSC Adidas has recently signed several sub-rent agreements for its offices and warehouses through 2024 and 2026, respectively. The company also negotiated a 14 percent discount on a rate fee for its Moscow office until the end of 2023.
At the end of 2022, Adidas rented 153 shopping floor spaces in Russia, including one near the Kuznetsk bridge in Russia, where the company ran a store that it considered a flagship for the local market.
Adidas could follow the lead of Reebok, which sold its Russian business to Turkish holding company FLO Retail at the end of 2022. Following the deal, all Reebok stores in the country were relaunched under a Sneaker Box banner and now operate in the multi-brand format, selling Reebok, among other things.
Marina Malakhatko, director of the Russian retail company Core.xp assumed that Adidas could turn to a similar solution, selling the Russian business, after which some stores would be re-opened under a new brand name. She added that supplies in that scenario would also start flowing through third parties, as Adidas would not sell anything directly to Russia. Selling the business to local managers is also a popular option for Western companies seeking a way out of the Russian market. Quite a few market players opted to pass their assets for a symbolic sum of one euro, including a buyback option in the contract for the next 3 to 5 years. The Russian office of Adidas declined to answer any questions about the company’s plans.
A growth in popularity of multi-brand stores is one of the key consequences of the exodus of foreign sporting goods manufacturers from Russia, commented Eugenia Khakberdieva, head of the retail department of the Russian real estate company NF Group. Russian marketplaces are also believed to benefit from this trend, especially since some of them started selling goods from the brands that exited the market. Khakberdieva said that after resuming operation under the new banner, the company would have to compete with the same Sneaker Box as well as Sportmaster and its sporting goods brand Demix. Still, she added, the competition is not likely to be too fierce, as Russian sporting goods retail has room for growth.
