The business is being sold to Sephora’s local manager in Russia, which will ensure continuity of employment for the company’s 1200 employees in the country and keep its 88 stores operational.
Once the deal receives regulatory approval, Sephora stores will be rebranded as “Ile de Beaute,” which translates to “Island of Beauty.”
“It sounds very rational indeed that Western companies in general will not go on paying rent and labor forever in Russia if operations cannot be resumed,” Luca Solca, an analyst at Sanford C Berstein, told Bloomberg.
While Sephora is the second-biggest revenue driver for its parent company, its pullout from Russia will hardly make a material impact as Russia accounts for only 2% to 3% of the global market for personal luxury goods.
Some of the other major brands that have left Russia in response to economic sanctions placed by Europe and the U.S. include Nike, Marks and Spencer, Nestle, and McDonald’s, among others.
Overall, more than 450 companies have either exited or significantly scaled back operations in Russia. According to Yale’s estimates, the mass exodus of Western firms from the country has cost Russia a stunning 45% of its overall GDP.