(MENAFN) French DIY retailer Leroy Merlin announced on Friday that it would be exiting Russia, ending an 18-year presence in the country. The move comes after intense scrutiny following Russia's invasion of Ukraine last year. Unlike other western companies that quickly disengaged from Russia after the attack, Leroy Merlin resisted calls to leave, stating that it owed it to customers to keep them supplied and to local staff to keep them employed.
Russia is Leroy Merlin's biggest foreign market, with 113 stores and contributing around 20% to the company's overall revenues. However, the company's stance was met with criticism from Ukraine, which accused it of sponsoring Russia's war effort.
Leroy Merlin's parent company, Adeo, announced that it would transfer control of Leroy Merlin to local management in Russia, where it is among the biggest foreign employers. Adeo stated that the move "should preserve the jobs of the 45,000 employees and ensure that the company's activity remains at the service" of the population.
According to Adeo, the decision to exit Russia was made after several months of work initiated in compliance with international regulations. The transaction is subject to approval by Russian authorities. The move to exit Russia marks a significant shift for Leroy Merlin, which has been a major player in the Russian market for almost two decades.
The decision to exit Russia comes amid increasing tensions between Russia and the West, as well as economic sanctions imposed by the US and EU on Russia. The sanctions have had a significant impact on the Russian economy, causing many western companies to reconsider their presence in the country.
Leroy Merlin's decision to exit Russia demonstrates the challenges faced by foreign companies operating in politically sensitive markets. The move is likely to have significant implications for the Russian retail sector, particularly given Leroy Merlin's size and scale in the market. However, the company's decision to transfer control to local management may help to mitigate some of the negative impacts of its exit.
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