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Nike not renewing franchise agreements in Russia

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© Reuters. One customer can be seen in the window of a Nike outlet near Moscow (Russia), April 23, 2016 REUTERS/GrigoryDukor

(Reuters) – U.S. sportswear manufacturer Nike (NYSE:) did not renew agreements with Russia’s largest franchisee, Vedomosti reported Wednesday. This is the latest departure by an American brand after the Russian invasion of Ukraine.

Nike stated on March 3 that all Nike stores Russia-owned or -operated in Russia would be temporarily closed. In response to Moscow’s action in Ukraine, Nike has indicated that the remaining outlets are still being operated by independent partners.

Vedomosti has reported that the chief of Inventive Retail Group IRG, which manages Nike-branded stores across Russia via Up And Run subsidiary, stated that Nike is no longer supplying Russian goods.

Vedomosti quoted IRG President Tikhonsmykov, as saying that “As supply of goods runs out IRG must close all its shops under the brand”, in an email to employees.

Smykov said, “We began a joint company in 2012 and lovingly built up the largest chain of stores in the nation. We ended up in a position where it cannot exist 10 years later.”

Nike didn’t immediately reply to our request for comment.

IRG stated that it couldn’t comment on Nike’s relationship due to contractual concerns.

A spokesperson for IRG stated that deliveries had stopped, and there was a shortage of goods. We cannot continue to support mono-branded Nike shops and we will have to shut them down due to current circumstances.

Up and Run has 37 locations across Russia. Its website lists 28 as open.

Reuters visited three Nike stores in this month’s March, including the flagship Moscow location.

Vedomosti used data from Rospatent to show that Up And Run franchise agreements, along with other A3 Sport franchisees, and Yar franchise agreements, will expire May 26, according to Rospatent.

Reuters couldn’t immediately verify this data.

Nike made additional efforts to distance its self from Russia by pulling sponsorship of Spartak Moscow’s kit sponsor. Spartak Moscow is one Russia’s most beloved football clubs. It later axed the second-tier team due to financial problems.

This Monday Starbucks Corp (NASDAQ: ) declared it was leaving Russia. On Monday, McDonald’s trademark, “Golden Arches”, was also removed from Moscow by McDonald’s (NYSE) following its sale to a licensed operator.

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