Levi Strauss does not expect to be able to reopen in Russia this year, its chief executive said on Wednesday, a month after the California jeans maker suspended operations there “temporarily” in response to Vladimir Putin’s invasion of Ukraine.
“The way things are going now, I’m not optimistic we’ll be back in business in full force any time soon,” Chip Bergh told the Financial Times, adding that its forecasts now assumed no further revenues in 2022 from a market that contributed about 2 per cent of sales last year.
Levi’s is still paying more than 800 employees in Russia, and has kept a couple of outlet stores open “to flush inventory”, he said, but “every day when you open the newspaper the situation looks worse”.
Conditions for western companies in Russia were “really difficult”, Bergh said, noting authorities had assumed powers that could allow them to nationalize the operations of businesses that stop supplying Russian customers.
“They could literally take our trademark,” he warned, echoing a concern other executives have voiced privately.
A Boston Consulting Group survey, released this week, found that two-thirds of investors expected it would take at least two years before western companies were willing to operate in Russia again, including 39 per cent that said it would be five years or more.
Few CEOs have made any public projections of how long they might be frozen out of Russia’s market, however.
Despite the question hanging over Russia, Levi’s reaffirmed its full-year guidance after delivering first-quarter revenues and earnings per share that beat consensus estimates.
Read more on Levi’s outlook on Russia here