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. Last Updated: 07/27/2016

Clothing Retailers Closing Shop

MTThe window of a store on Tverskaya Ulitsa advertising T-shirts at half price.

DUSSELDORF, Germany — A third of Russia’s 42,000 clothing retailers will close by the end of this year after the economic crisis hurt local spending, according to the head of the European Fashion and Textile Export Council.

The likely retail failures and order cutbacks in Russia mean that companies in fashion-exporting nations such as Germany will deliver less apparel for the winter season, said Reinhard Doepfer, who leads the Brussels- and Stuttgart-based industry group. He said the council surveyed German clothing makers and found that an average of 35 percent of their deliveries to Russia would be unsold this summer.

“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 anymore,” Doepfer said in an interview at last week’s CPD fashion fair in Dusseldorf.

German clothing companies ranging from luxury brand Hugo Boss to menswear maker Ahlers targeted Russia for growth as the nation’s burgeoning economy 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.

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 ($231 million), Doepfer said.

The decline will accelerate during the year, as autumn-winter orders have fallen about 30 percent, he added.

Some analysts said Doepfer’s estimate 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 Lebsak-Kleimans, president of 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.

Russia’s gross domestic product 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 then in the previous year, according to Doepfer. Italy exported apparel to Russia worth 1.25 billion euros and will also post a decline, he said.