Retailers Warn Of Another Financial Hit Amid Russia’s Invasion Of Ukraine

U.S. and European retailers are warning that they could be financially impacted by Russia’s invasion of Ukraine, which would mark another hit for an industry that saw big losses during the pandemic

Several retailers have temporarily stopped their operations in Russia due to the attacks on Ukraine amid sanctions or to show condemnation of the war. Some are also warning of the impact the invasion could have on future business.

Retailers are just now pulling out of the pandemic and wrestling with attracting consumers back to brick-and-mortar stores as many reduce their overall real estate portfolio. Consumers are shifting to online shopping, but retailers are left uncertain about what inflation, challenges with the supply chain, and now the war in Ukraine, will bring to their operations.

On Wednesday, Pittsburgh-based apparel retailer American Eagle Outfitters addressed the situation between Russia and Ukraine in its yearly forecast without offering financial specifics, only saying it could impact consumer demand.

American Eagle does not have any stores located outside of North America and Hong Kong but ships goods to 81 countries.

Ohio-based Victoria’s Secret echoed these sentiments, saying on Wednesday that the “global unrest” will bring a challenging environment in the coming months, compounded by inflation, CNBC reported. The lingerie company has a small number of stores in Russia.

Michelle Gass, CEO of retail chain Kohl's, said Tuesday in an earnings call with analysts that, “We’re prepared that there’s going to be an environment of a lot of uncertainty. We certainly contemplated that as we guided this year. We’ll stay close and be responsive,” as reported by the news outlet.

Dutch-headquartered furniture giant Ikea also closed all of its stores in Russia and Belarus, in addition to stopping production in Russia. It also ceased all exports and imports to and from Russia and Belarus, the company said in a statement.

Ikea has 17 stores in Russia and said 15,000 workers will be affected by the shutdown.

“The war has both a huge human impact and is resulting in serious disruptions to supply chain and trading conditions, which is why the company groups have decided to temporarily pause Ikea operations in Russia,” Ikea said.

Stockholm-based clothing chain H&M will also close 168 stores in Russia, while sportswear giant Nike also suspended sales in Russia, saying on its website that it can’t currently guarantee product delivery in the country.

Chuck Grom, an analyst with Gordon Haskett, said one of the biggest issues for retailers will be how long the Russia-Ukraine crisis endures.

Grom told CNBC, “You have to think the longer it goes on, the more problematic it gets. In other words, the consumer spends more time getting absorbed with the situation.”