The Council, which groups together national fashion associations in western Europe, surveyed German clothing makers and found an average of 35 percent of their deliveries to Russia would be unsold this summer. Casualties of Russia’s downturn have included outlets of Diesel SpA and Stella McCartney, and Kommersant has reported that the local franchise for Hong Kong sportswear maker Sprandi International Ltd. closed 37 outlets in Moscow and St. Petersburg after its bankruptcy in May.

“Many important German fashion suppliers have deleted between 20 percent and 30 percent of Russia’s fashion retailers from their customer records, because they don’t meet the basic conditions of doing business any more,” Doepfer said in an interview at last week’s CPD fashion fair in Dusseldorf.

German clothing companies ranging from luxury brand Hugo Boss AG to menswear maker Ahlers AG targeted Russia for growth as the nation’s economic growth outpaced that of Germany earlier this decade. Boss, known for its men’s suits, reported a wider loss last week, citing a 35 percent plunge in revenue from eastern Europe, excluding the effect of foreign-exchange moves. Russia is the label’s largest market in the region.

German exports

Germany is Europe’s second-largest fashion-exporting nation, trailing only Italy. Germany’s first-quarter fashion sales to Russia declined 6 percent to 162 million euros (US$231 million), according to Doepfer. The decline will accelerate during the year, as autumn-winter orders have fallen about 30 percent, he added.

Some Russian analysts said Doepfer’s forecast for a third of stores to close was too pessimistic, though they acknowledged the weak local demand.

“About 10 percent to 20 percent of retailers may go bankrupt this year, but not a third,” said Anna LebsakKleimans, president of Moscow -based researcher Fashion Consulting Group. Some of the halted German shipments will be replaced by cheaper imports from China and Turkey, she said.

“Retail chains may be reducing the number of outlets, but they are not shutting down completely,” she said.

In May, Kommersant reported that Russian Sport Fashion Group would close 13 Reebok stores. Another clothing chain, Plato, closed down its 13 stores in St. Petersburg after filing for insolvency in June, according to Vedomosti.

Gross domestic product in Russia shrank 9.8 percent in the first quarter, the worst contraction in 15 years. The average monthly wage dropped 5.2 percent in June.

Germany exported clothes worth 750 million euros last year to Russia, 6 percent more than in the previous year, according to Doepfer. Italy exported fashions to Russia worth 1.25 billion euros, and will also post a decline, he said.

Source: Bloomberg