French DIY retailer Leroy Merlin bows to pressure to exit Russia

Leroy Merlin, the French DIY retailer, plans to sell its operations in Russia to local management, reversing its previous decision to stay in the country more than a year after the invasion of Ukraine prompted many western companies to pull out.

The retailer, which has 113 stores and employs 45,000 people in Russia, is owned by the prominent northern French Mulliez family, who also own retailer Auchan and sporting goods chain Decathlon.

Leroy Merlin had previously said it would remain in the country, stating that it would not “abandon” its “employees, their families and our clients” shortly after Russia’s invasion. But on Friday it announced a change of direction.

“This process is the result of work initiated several months ago in compliance with international regulations. It follows the suspension of all new investments by [the Mulliez family holding company] in Russia from the beginning of the conflict and the gradual independence of the local operation,” said Adeo, the parent company, in a statement.

Leroy Merlin and Auchan have faced scrutiny over their operations in Russia after French newspaper Le Monde reported in February that Auchan’s network in the country had sent supplies to the Russian army. The newspaper also reported that Leroy Merlin stores allowed collections in support of the war effort to take place in front of their outlets.

The group denied all the allegations “without restriction and without ambiguity”, it said at the time.

Leroy Merlin, which has been in Russia for 18 years, did not disclose any financial information on the deal or whether it was retaining any stake in the business, but added that it would be subject to approval by Russian authorities.

“We do not know what the local authorities will tell us . . . Other companies like Danone or Schneider have also asked to cede control of their activities, and they have been waiting for an answer for months,” said Adeo’s director Philippe Zimmermann in an interview with local newspaper La Voix du Nord on Friday. Before the war, Leroy Merlin made about €5bn in revenues in Russia every year, he added.

Leroy Merlin did not respond to a request for comment from the Financial Times.

Many companies, including several based in France, have faced criticism for their reticence to withdraw from Russia following the invasion.

French energy giant Total has come under fire for being slower than rivals such as Shell to wind down its Russian holdings and while continuing to receive dividends from them. However, it has recently taken several writedowns on its Russian interests, including $3.7bn on its stake in gas producer Novatek in December, and has said it sees no future in Russia and will halt new investments.

Danone announced in October that it would exit its dairy and yoghurt business in Russia in a transaction that could result in a write-off of up to €1bn for one of the world’s biggest makers of consumer goods, after initially saying it would remain in the country.

Additional reporting by Sarah White

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