// H&M, Inditex and Reserved-owner LPP have all entered new markets in an attempt to plug the gap created from its exit from Russia
// H&M blamed its exit from the country for its tumble in profits which plunged 87%
This week marks one year since Russia invaded Ukraine.
Retailers were quick to react in the wake of the invasion with many western chains withdrawing their operations from Russia within weeks.
However, the move has led to giants such as H&M, Inditex and Reserved-owner LPP to look for new markets to plug the revenue gap.
Tatiana Lisitsina, retail analyst at Bloomberg Intelligence, said the withdrawal of European retailers is exacerbating the slowdown in sales and triggering a search for substitute growth markets.
Lisitsina said that Inditex, H&M, Ikea, LPP and Asos had the highest sales exposure in Russia.
H&M, which blamed its exit from Russia for a collapse in profits in its fourth quarter to the end of November, has targetted expansion in Latin America to plug the gap.
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Similarly, Zara-owner Inditex fully exited Russia permanently after it sold its operations in the country – which accounted for 10% of its global sales – to Daher Group and has instead focused on expanding in the US.
Reserved-owner LPP said it planned to strengthen its footprint in western and southern Europe to plug the gap created after it suspended operations in Ukraine and Russia.
The retailer is gearing up to open 400 stores throughout Europe by the end of 2023, including several new shops in London.
There are European retailers that still operate in Russia since the war in Ukraine, such as Auchan, Leroy Merlin and Metro. However, Lisitsina said these chains could suffer reputational damage in Eastern Europe, which leaves room for rivals such as Kingfisher in Poland to take market share.
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