M&S pulls out of Russia, warns sales hit due to cost-of-living crisis | business news

Marks & Spencer has said it will pull out of Russia and warned of slowing sales due to the cost-of-living crisis.

The Russian arm of the retail giant is run by Turkish franchisees, which operate 48 stores with 1,200 employees.

The company stopped shipments to stores in March, but has now said it will “completely exit our Russian franchise” because it is a “values-based business.”

He said the cost of leaving Russia, coupled with business interruption in Ukraine, would amount to £31m.

The company’s Ukrainian business has been partially closed due to the Russian invasion.

M&S joins a growing list of big brands, including mcdonald’s Y starbuckswho have decided to withdraw from Russia because of the conflict.

The retailer said earnings for the new financial year will start at a lower level due to the impact of its exit and the end of the trading fees holiday.

He said he expects this to stay lower through the year as inflation hits his costs and consumers’ ability to spend.

The company said it was being hit by rising food costs due to global supply problems, labor shortages and costs related to borders and customs.

Its apparel and home business is under pressure due to rising factory, transportation and freight costs, as well as ongoing supply issues in China.

“Therefore, we are planning for an adverse impact on [sales] volumes due to price inflation, which slows down the pace of sales growth,” the company warned.

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The firm said it sees no signs of inflation abating, but believes cost increases will slow in late September.

M&S has just released its full-year results, which show the company has recovered from a reported £209.4m pre-tax loss in 2021. Pre-tax profit rose to £391.7m for the year to April 2022.

Read more: Products hit hardest by rising prices reveal grocery inflation at 13-year high

The retailer said it was hit by EU border costs due to Brexit and decided to cancel its high street food franchise operation in France, as well as chilled food exports to its business in the Czech Republic.

It said it continues to absorb administrative costs affecting food exports to Ireland, “none of which benefit consumers”.

M&S said it would further mitigate these costs by sourcing locally and automating its processes.

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