Sanctions against Russia would hit Nike, Adidas

Sanctions against Russia would hit Nike, Adidas

With reports that Western nations are considering “Iran-style sanctions” against Russia over the crisis in Ukraine, officials at Adidas and Nike must be recalibrating their expectations in Russia.

Iran-style retaliation from the West, which would include freezing Russia’s foreign reserves, banking assets and halting lending to companies, is being treated as an unlikely worst-case scenario, according to the people who asked not to be identified as the talks are under way. Officials are calculating the cost to the economy, the people said.

Adidas officials acknowledged last week, in reporting the company’s fourth quarter and end-of-2013 financial results, that the situation in Ukraine did not bode well for overall performance in Russia.

Speaking at Adidas’s annual results in Herzogenaurach, Germany, chief executive Herbert Hainer warned that the company was likely to suffer negative effects from the turmoil in Ukraine.

Russia is one of the group’s key growth markets — and one of the countries where it has a clear lead in sales over arch-rival Nike.

And any hopes the German company or anyone else had that German Chancellor Angela Merkel would be able to broker a deal with Russian President Vladimir Putin appear to have vanished.

Nike officials have said little or nothing about Ukraine, Russia or Crimea. Last year, however, the company predicted Russia would soon account for $1 billion in annual sales.

Nike also launched a huge “Play Russian” advertising campaign, “which,” as the company said, “celebrates the way Russians embrace the winter as their playground and challenges the world to #playrussian.” The campaign was timed to coincide with the 2014 Sochi Winter Olympics. Washington Capitals winger Alex Ovechkin was the centerpiece of the campaign, but even American basketball star Kobe Bryant got into the act in December by making a surprise appearance in Nike’s Play Russian campaign. (Of course, Kobe gets involved in multiple Nike ads that have little to do with Kobe. Case in point, from China…

— Allan Brettman

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