Ikea closes all stores and factories in Russia amid exodus of western firms

Top brands from M&S to Apple, Jaguar Land Rover, Expedia and Coca-Cola are suspending operations

Last modified on Thu 3 Mar 2022 12.20 EST

Ikea has temporarily closed all stores and factories across Russia in a move affecting 15,000 workers, becoming the latest in a swathe of western firms to halt operations in the country since it invaded Ukraine.

The Swedish flatpack furniture company has mothballed its 17 outlets across Russia but said it would keep its Mega shopping centres open to allow access to essential retailers, such as food shops and pharmacies.

Production at three manufacturing sites in Russia will be paused, and all imports and exports in and out of the country and its ally Belarus will be halted.

Brand owner Inter Ikea and store owner Ingka Group said they had “secured employment and income stability” for the workers directly impacted by the decisions, including its 416 co-workers in Ukraine, where its one store and online operations have been suspended since the start of the invasion on 24 February.

It was one of several firms announcing the suspension of activities in Russia on Thursday.

M&S said it has suspended shipments to its Turkish franchisee’s business in Russia, which has 48 stores and 1,200 employees. The British retailer said: “We are building on our existing support for Unicef’s UK’s Ukraine appeal with a £1.5m package to support the UN Refugee Agency and Unicef to help children and families in need.”

It also said it was sending £0.5m of coats and thermals to Ukraine, where it ceased operations at 10 stores a week ago.

Volkswagen Group announced it had stopped production of vehicles in Russia until further notice, a decision affecting the Russian production sites in Kaluga and Nizhny Novgorod. Vehicle exports to Russia have also been stopped with immediate effect, it said.

Diageo, which makes Smirnoff vodka and Guinness, said it had paused exports to Russia and Ukraine, while the Coca-Cola Hellenic Bottling Company announced it had halted production at its factory in Kyiv and evacuated its employees.

The London-listed company is one of the main bottlers for Coca-Cola worldwide and generated a fifth of its sales and operating profit from Russia and Ukraine last year.

Online booking firm Expedia said it had stopped selling travel in and out of Russia, making it one of the first travel companies to announce such a move.

Ikea has had a presence in Russia since 2000 and is understood to be one of its largest western employers.

It made retail sales of €1.6bn (£1.3 bn) in Russia in the last financial year, which accounts for 4% of total retail sales.

A spokesperson said: “The war has a huge human impact already. It is also resulting in serious disruptions to supply chain and trading conditions. For all of these reasons, the company groups have decided to temporarily pause Ikea operations in Russia.”

Since the Russian invasion of Ukraine began last week, there has been an exodus of western companies from Russia.

They include some big names in fashion. On Wednesday, the British online retailers Boohoo and Asos announced they had suspended sales in the country, as did the Swedish clothing giant H&M.

Boohoo said it halted sales immediately after the invasion began and has closed its Russian trading websites. The company said: “Sales made by the group into Russia are not material, totalling less than 0.1% of group revenues.”

A spokesperson for Asos said it had “decided that it is neither practical nor right to continue to trade in Russia”. The country accounted for 4% of the group’s sales and contributed about £20m to profits last year.

H&M currently has more than 150 stores in Russia, its 2020 annual report says, which will all be shuttered. Its shops in Ukraine have already been closed temporarily due to safety concerns.

The Spanish fashion retailer Mango announced a temporary closure of its 120 shops in Russia and its online sales site there.

Burberry said it had ceased shipments to the country, effectively shutting down its online operation there. The British luxury fashion brand has three stores in Russia, one of which is run by a franchisee and one in Moscow’s Red Square, and these currently remain open but they are not receiving new deliveries.

Nike has said it is preventing Russian customers from buying online and Adidas has suspended its partnership with the Russian Football Union.

Other brands to have taken action include Apple which is pausing sales and Meta, the owner of Facebook, which said it had stopped recommending content from Russian state media to all users of Facebook, with Instagram set to follow.

Carmaker Ford said it had suspended its commercial van joint venture in Russia “until further notice”. And in the past few days, General Motors, Jaguar Land Rover and Renault have all halted sales and operations in Russia.

The Walt Disney Company, Sony and Warner Bros have said they are pausing their release of films in Russia while Netflix also announced it has no plans to distribute news, sport and entertainment channels from Russian state media.

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