Nike, Ikea close stores in Russia as corporate exodus from the country grows

Customers shop at an Ikea in Moscow on March 3, 2022, ahead of the chain's closure in the country. PHOTO: REUTERS

(REUTERS) - Nike and Ikea shut down stores in Russia on Thursday (March 3), adding to a growing number of the world's best known brands to pull out of a country that has become a global outcast for its invasion of Ukraine.

Western sanctions - including shutting out some Russian banks from the Swift global financial network, new export controls and closure of air space - have led dozens of global companies to pause operations in the country.

Spanish fashion retailer Mango said on Thursday it was temporarily closing its shops and its online sale website in Russia, and Spirits company Diageo, the maker of Smirnoff vodka and Guinness, said it had paused exports to Ukraine and Russia. Intel and Cisco said they had stopped sales in Russia.

Accenture said it was discontinuing its Russian business, which had nearly 2,300 employees.

Companies like Apple, Ford and Shell have condemned Russia's attack, but some of the announcements on Thursday were more practical, focused on supplies and sanctions as shipping routes closes and governments banned exports to Russia.

Boeing chief executive David Calhoun, in a note to staff, acknowledged the violence in Ukraine but avoided politics.

"Moving forward, Boeing will continue to follow the lead of the US government and strictly adhere to the export controls and restrictions that have been announced governing work in Russia," he said in the note seen by Reuters, which described suspension of work in Russia and Ukraine.

Brazilian plane-maker Embraer joined Airbus and Boeing in halting parts supplies to Russian airlines.

Home furnishings retailer Ikea said it would close outlets in Russia and Russian ally Belarus, affecting 15,000 workers, and described its shutdowns in non-political terms.

"The war has both a huge human impact and is resulting in serious disruptions to supply chain and trading conditions, which is why the company groups have decided to temporarily pause Ikea operations in Russia," Ikea said in a statement.

Nike said it was "deeply troubled by the devastating crisis in Ukraine" and described its closing of stores in this way: "Given the rapidly evolving situation, and the increasing challenges of operating our business, Nike will be pausing operations in Russia."

Some companies, including McDonald's and PepsiCo, have been quiet about plans.

Sanctions toll

The costs of corporate actions are starting to add up, with more than US$110 billion (S$149 billion) in Russia exposure announced by global companies, banks and investors.

Norway's US$1.3 trillion wealth fund said its Russian assets, worth around US$3 billion before the invasion, have now become effectively worthless.

Underscoring the challenges global companies are facing as they comply with sanctions against Russia, Societe Generale said on Thursday it could see an "extreme scenario" where Russia strips the bank of its local operations. The lender has a US$20 billion exposure to Russia.

Citigroup said on Wednesday it could face billions of dollars in losses on its exposure to Russia and was looking to exit Russian assets. Bank shares have taken a drubbing in recent days amid fears of possible write-downs and weaker economies.

Britain said on Thursday it will ban Russian companies from the London insurance market, the world's largest commercial and specialty insurance centre.

Follow The Straits Times' live coverage on the Ukraine crisis here.

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