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US-based apparel retailer Nike has decided not to renew its franchise agreement with Russian franchisee Inventive Retail Group (IRG), signalling its exit from the Russian market, Vedomosti has reported.

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The report comes after IRG president Tikhon Smykov sent a letter to the company’s employees informing them of the non-renewal of the agreement.

Smykov explained that the company cannot organise the supply of goods to Russia in the future.

He was quoted as saying in his letter: “We started a joint business in 2012, we lovingly built up the best chain of stores in the country and ended up ten years later in a situation where that business cannot exist.”

IRG operates 37 Nike-branded stores in Russia via its subsidiary, Up And Run.

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The company said that there had been a shortage of goods since Nike suspended shipments to the country.

IRG public relations director Ludmila Semushkina was quoted as saying: “In the current realities, we cannot continue to support the operation of mono-branded Nike stores and will be forced to close them.”

In March this year, Nike temporarily suspended operations at all its Nike-owned and Nike-operated stores in Russia in response to the invasion of Ukraine.

Since March, the number of Nike single-brand stores in Russia has fallen from 116 to 56, 19 of which are temporarily closed.

Some of the brand’s Russian stores are being operated by independent partners.

Nike’s withdrawal from the country comes after coffee chain Starbucks and fast food retailer McDonald’s both announced their exit from the Russian market this month.

Earlier this week, Netherlands-based technology investor Prosus decided to divest its Russian online marketplace, Avito, due to the ongoing conflict.

Avito is part of Prosus’s larger OLX Group and is estimated to be valued at around $6bn.