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Nike not renewing franchise agreements in Russia

US sportswear maker Nike (NKE.N) has not renewed agreements with its largest franchisee in Russia, the Vedomosti daily reported on Wednesday, marking the latest exit by a major US brand since Russian forces entered Ukraine.

Nike said on March 3 it would temporarily suspend operations at all its Nike-owned and -operated stores in Russia in response to Moscow’s actions in Ukraine and has said that those still open are operated by independent partners.

The head of Inventive Retail Group (IRG), which operates Nike-branded stores in Russia through its subsidiary Up And Run, said Nike was no longer supplying goods to Russia, Vedomosti reported.

“As supplies of goods run out IRG will be forced to close all of its shops under this brand,” Vedomosti quoted IRG President Tikhon Smykov as saying in a letter to employees.

“We started a joint business in 2012, we lovingly built up the best chain of stores in the country and ended up 10 years later in a situation where that business cannot exist,” Smykov wrote.

Nike did not immediately respond to a request for comment.

IRG said it could not comment on its relationship with Nike due to contractual issues.

“As you can see from our shops, deliveries have stopped and goods are in short supply,” an IRG spokesperson said. “In the current realities we can not continue to support the operation of mono-branded Nike stores and will be forced to close them.”

Up And Run operates 37 stores across Russia, from St Petersburg to Novosibirsk, and its website listed 28 of them as still open.

Reuters has visited three Nike stores this month, including its flagship central Moscow store, which has been operating as usual.

Vedomosti cited data from Rospatent, Russia’s patent office, as saying that franchise agreements with Up And Run, as well as other franchisees A3 Sport and Yar, expire on May 26.

Reuters could not immediately verify that data.

Nike has made other efforts to distance itself from Russia, pulling its kit sponsorship for Spartak Moscow, one of Russia’s most popular football clubs, which subsequently axed its second-tier team, citing financial difficulties.

On Monday, Starbucks Corp (SBUX.O) announced it was pulling out of Russia. Also on Monday, McDonald’s (MCD.N) trademark “Golden Arches” were lowered near Moscow, following the sale of its burger chain to a licensee.

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