Paul Smith, the renowned global fashion giant based in Nottingham, has recently made the decision to withdraw from the Russian market. In a surprising move, the company confessed that it had erred in continuing to trade in Russia, even if it was done through a franchise partner. Consequently, the two Paul Smith stores located in Moscow’s Red Square and St. Petersburg will be shutting down.
The decision to pull out of Russia comes in the wake of several other British brands choosing to withdraw from the country following the invasion of Ukraine. Despite the ongoing conflict, the two Paul Smith stores had remained open, which prompted the Daily Mail to conduct an investigation. Their findings revealed that the brand had been supplying stock to Mikhail Kusnirovich, a well-known Russian retail magnate, since the invasion. In response to this revelation, Paul Smith has publicly vowed to terminate this commercial relationship and close down its stores.
Clarifying the situation, a spokesperson for Paul Smith emphasized that the company does not directly trade with Russia. Rather, for the past two decades, they have relied on a franchise partner who operates the stores in the country. The spokesperson acknowledged that it was an error to allow these stores to continue trading under the Paul Smith brand name during the ongoing conflict in Ukraine. As a result, Paul Smith has made an official request for the closure of these stores and has suspended all supplies to the distributor.
The decision made by Paul Smith has received accolades from Bob Seely, the Conservative Member of Parliament for the Isle of Wight, who praised the company for taking the right action. It is important to note that Paul Smith has not been accused of breaking any rules, as British government-imposed sanctions allow brands to supply goods to Russia if they are sold for less than £250.
This move by Paul Smith reflects the growing concerns among international businesses regarding the volatile political situation in the region. The fashion industry, in particular, has been heavily affected by these issues, leading many brands to reevaluate their operations in Russia. While it may have taken some time for Paul Smith to reach this decision, their acknowledgement of their mistake and their commitment to rectifying it is commendable. As tensions in the region continue to escalate, it remains to be seen how other businesses will respond.
Useful links:
1. BBC: Paul Smith to close its stores in Russia
2. Financial Times: Paul Smith pulls out of Russia after supplying stock to retail magnate
