LVMH's Sephora follows other Western companies leaving Russia. The beauty retailer is selling the subsidiary to the local general manager of the chain.

WHO: The Île de Beauté perfumery chain was founded in 2001 and became the leading beauty retailer in the Russian market with 100 stores when Sephora made an initial investment in the business in 2006.

WHY: Sephora's Russian stores have been closed since early March, when LVMH and companies announced they were suspending operations in the country. European and US sanctions on Russia have made operations in-market increasingly complex. Plans for a law allowing Moscow to seize the assets of foreign businesses and impose criminal penalties prompted the acceleration of many luxury goods brands to expedite their departure from the market.

DETAILS:

• Sephora is selling 100 percent of its shares in the Russian business to the business’ local general manager. While still subject to clearance, the new deal will allow for the reopening of the chain in the region.
• The new owner will operate the business under the historical "Île de Beauté" brand. 
• Sephora originally entered the Russian market through franchises, shuttering that business in 2008.
• In 2008, Sephora acquired a 45% stake in the Russian perfumery chain Île de Beauté in an agreement that provided Sephora the option to become a majority shareholder over time. At the time of the investment, the Russian retailer had 100 stores. The transaction gave Sephora a major foothold in the high-growth market.
• Sephora took full control of the chain in 2016 and initiated rebranding stores in Russia under the Sephora banner in 2018. The process was still underway when the pandemic hit in 2020. 
• WWD reported Sephora's Russian business generated less than 3% of the retailer's total sales, according to industry resources.