The statement fell in the morning, Thursday, March 23. The Mulliez family, owner of the DIY brand Leroy Merlin, announces its intention to sell all of its stores in Russia. A significant choice for the group since the country led by Vladimir Putin is the company’s second largest market: the 113 Leroy Merlin stores represent between 18 and 20% of the company’s total turnover.
It is also one of the main foreign employers on Russian soil since it employs 45,000 employees. While Adeo, parent company of the sign of vices and hammers, had announced to continue its activities the day after the invasion of Ukraine by the Russian army, it finally chose to disengage. The operation must make it possible “to preserve jobs and to perpetuate the activity of the company”, insists the press release.
Strategic maneuvers
What the firm does not say is that it has been scolded for several weeks by NGOs and French civil society. Equipment products from the store shelves were even reportedly photographed on the Russian front. The announcement therefore aims to protect the group’s image.
Leroy Merlin retires… While remaining in Russia. As the economic daily explains The echoes, the Mulliez family does not intend to cede ownership of its profitable business, and could keep control of production through various financial games. The operation closely resembles the strategy used by many CAC 40 firms over the past year, such as Total Energies, which decided to depreciate the value of its Russian assets on its balance sheet.
Around 70 French subsidiaries in Russia
According to one study, conducted by Swiss academics, published in January, only 8.5% of companies in the European Union and G7 countries with stakes in Russian subsidiaries before the start of the war had really taken steps to withdraw from autumn 2022. Before the invasion, 1,200 French-owned companies operated there, including almost three-quarters of the CAC 40 companies and a host of SMEs and ETIs. Since the fall of the USSR in the early 1990s, France has become the second largest foreign investor in Russia. There would remain 70 tricolor subsidiaries now on site, according to the study.
If the European Union and the French government have prohibited the maintenance of activity in Russia for companies in strategic sectors such as armaments or energy, it is still tolerated for others. Thus, the tennis equipment manufacturer Babolat or the lingerie brand Etam, for example, take refuge behind this legal framework to pursue their activities in Russia without expressing themselves publicly.
Safeguarding employment and the franchise system
Following the example of Leroy Merlin, firms put forward the safeguarding of employment. This is the case of La Redoute, which closed its stores in Saint Petersburg and Moscow but maintained its online sales site. The ready-to-wear brand says it acted on behalf of the twenty Russian employees who work for the company’s website.
The Dessange hair salon chain, contacted by Marianne, instead holds the franchise system responsible. “The Dessange salons still open in Russia are operated by a master franchise. We have no control over them, they are completely autonomous”, justified a spokesperson for the company to the weekly. The contract giving an entrepreneur exclusive development prevents the brand from withdrawing, according to the French brand.
“Feeding the people”
Large retailers and food groups display still different justifications. Auchan, Bonduelle, the cheese group Savencia or even Lactalis… All claim to stay in Russia to “feed the populations”. This was plainly expressed by the communication CEO of the world dairy leader, Christophe Piednoël, at the microphone of BFM Business “We have four factories in Russia, we considered that our job is to feed civilian populations, so we wanted to continue to do so where we are established”. However, the group’s activities in Russia represent only 1% of its total turnover of 22 billion euros.
These firms, however, are walking on eggshells. The partial mobilization of the country decreed by Vladimir Putin in September 2022 provides for the rallying of national and foreign companies established on Russian soil to the war effort. The situation does not escape the Ukrainian power, which has been calling for a withdrawal for months.
In mid-February, Ukrainian Foreign Minister Dmytro Kouleba accused the retail group Auchan of having become a “full weapon of Russian aggression” after the publication of an investigation by the daily The world that the group participated in a food distribution to Russian soldiers. A few months earlier, during an exchange by videoconference with French deputies, President Volodymyr Zelensky had pointed to companies based in Russia by presenting them as responsible for “financing the murder of children and women” as well as “the rape “.