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Tuesday, Jul 15, 2025

M&S pulls out of Russia and warns of hit to sales due to cost of living crisis

M&S pulls out of Russia and warns of hit to sales due to cost of living crisis

The retailer joins a growing list of big brands, including McDonald's and Starbucks, that have decided to withdraw from Russia over the war in Ukraine.
Marks & Spencer has said it is exiting Russia and warned of slowing sales due to the cost of living crisis.

The retail giant's Russian arm is run by Turkish franchisees, operating 48 shops with 1,200 employees.

The company stopped shipments to the stores in March but has now said it will "fully exit our Russian franchise" because it is a "values-led business".

It said the cost of leaving Russia, along with business disruption in Ukraine, would amount to £31m.

The firm's Ukrainian business has been partly closed due to the Russian invasion.

M&S joins a growing list of big brands, including McDonald's and Starbucks, that have decided to withdraw from Russia over the conflict.

The retailer said profits for the new financial year will start at a lower level due to the impact of its departure and the end of the business rates holiday.

It said it expects this will stay lower during the year as inflation affects its costs and consumers' ability to spend.

The company said it was being impacted by increased food costs driven by global supply issues, labour shortages, and border and customs-related costs.

Its clothing and home business is under pressure because of growing factory, transport and freight costs, as well as continued supply issues in China.

"We are therefore planning for an adverse impact on [sales] volumes due to price inflation, slowing the rate of sales growth," the company warned.

The firm said it sees no sign of inflation abating but believes cost increases will slow down by the end of September.

M&S just released its full-year results, which showed the company recover from a £209.4m pre-tax loss reported in 2021. Pre-tax profits jumped to £391.7m for the year to April 2022.

The retailer said it was hit by EU border costs due to Brexit and decided to scrap its high street franchise food operation in France, as well as exports of chilled food to its business in the Czech Republic.

It said it continues to absorb administrative costs affecting food exports to Ireland, "none of which benefit consumers".

M&S said it would mitigate these costs further by increasing local sourcing and automating its processes.
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