Uniqlo bows to public pressure to close stores in Russia

Fashion company Uniqlo has suspended business operations in Russia and condemned its invasion of Ukraine, reversing course after its CEO initially vowed to keep selling clothing to the Russian public. 

The Japanese retailer's earlier stance contrasted with that of other major corporations that were quick to close stores and halt operations in protest of Russia's unprovoked attack on Ukraine. But on Thursday, amid mounting pressure on corporations to cut ties with Russia, Uniqlo parent company Fast Retailing said in a statement that it will "temporarily suspend" its operations there.

"While continuing our Uniqlo business in Russia, it has become clear to us that we can no longer proceed due to a number of difficulties," the company said in a statement. 

• These are the companies that have pulled out pulled out of Russia since is invasion of Ukraine
• These companies continue to do business in Russia

The CEO of Japanese retail holding company Fast Retailing, which owns Uniqlo, at first vowed to keep Uniqlo's 50 retail stores across Russia open, arguing that its citizens should be entitled to clothing and other essentials despite Putin's actions, global news organization Nikkei Asia reported. 

"Clothing is a necessity of life," CEO Tadashi Yanai told Nikkei last week. "The people of Russia have the same right to live as we do."

But that position proved to be untenable, with the company on Thursday saying it has "recently faced a number of difficulties, including operational challenges and the worsening of the conflict situation." 

Going against the grain

Uniqlo was an outlier among major corporations with footprints in Russia that halted business operations in an effort to undermine Russia's attack on Ukraine. Large companies from from Apple to Disney and Ikea abruptly exited the Russian market after Putin sent his troops into Ukraine February 23. 

Uniqlo competitor and Swedish fast-fashion chain H&M also said it would "temporarily pause all sales in Russia" in part over concern for the safety of its employees.

"H&M Group is deeply concerned about the tragic developments in Ukraine and stand with all the people who are suffering," the company said in a statement.

Fast Retailing's insistence on staying in Russia had generated backlash from some Uniqlo customers, who are fans of the clothing but opposed the company's geopolitical stance.

They even used social media to call for a boycott of Uniqlo when the company said it would continue to do business in Russia, as millions were fleeing war-torn Ukraine. Uniqlo, which describes itself on its website as the "fourth largest retailer in the world," operates around 1,500 stores globally. 

"And time to boycott Uniqlo. Really sad to read their announcement to stay in Russia," Titter user Tiia R said on March 7. 

Others on social media assailed the retailer and accused Uniqlo of supporting Russian aggression.

"From now on, I would not buy any Uniqlo stuff until you change your course upon the invading Russia," a Taiwan-based Twitter user said. 

"Never buy @UNIQLO_JP again. They have refused to stop operations in Russia. Big red flag. Terrible values," said @alejandro_m_g.

Uniqlo has taken steps to demonstrate it supports the people of Ukraine, who remain under unrelenting attack by Russia. 

On March 4, Fast Retailing said it would donate $10 million to the United Nations High Commissioner for Refugees, which is providing financial assistance to displaced Ukrainians. The funds will help cover the costs of shelter, psychosocial support and other services for those who were forced to flee, according to a statement from Fast Retailing. 

Fast Retailing also said it would donate 100,000 Uniqlo garments, including warm blankets, base layers and face masks to refugees. 

Major corporations across virtually every industry are pausing operations in Russia in an effort to hamstringing Russia financially. Those companies that continue to engage in Russia risk damaging their reputations. 

Steven Fox, founder and CEO of Veracity Worldwide, a strategic intelligence firm that advises businesses worldwide on geopolitical and regulatory risk, anticipated that Uniqlo would eventually pull out of Russia. "It would not be right to stick to business as usual in Russia," he told CBS MoneyWatch. 

Ultimately, it's up to companies to weigh the potential reputational harm staying in Russia could cause against the immediate financial impact of pulling out,  Fox said. 

"There are a multitude of risks involved, largely driven by what's the reputational risk, what do our shareholders think, what do our own employees think, what do our customers think?" he said