Within days of Vladimir Putin's full invasion of Ukraine in 2022, Zara owner Inditex announced the "termination" of its Russian operations, which appears to be a standout from its largest market outside of Spain.

However, the details of its exit make the world's largest fashion group (its Bershka, Pull & Bear and Stradivarius Brands also have presence in the country - if you choose to return, the location is large.

Inditex in early 2023, injected cash into cash, now known as the "New Fashion" company, operated a franchise for the Spanish group in the Middle East before selling "insignificant" payments to members of the Lebanese family, according to company documents and company statements.

An Financial Times survey found that alternative brands established by buyers are selling nearly the same products to Inditex while relying on the same supplier and hiring its former employees. Under the terms of the deal, Inditex has the correct "immediate" and does not need to convert the deal into a franchise arrangement, and its own brand will return to its former Russian store.

"It seems to be similar to other 'Boomerang' canceled scripts...or the basic work that comes back when it comes to paving deliciousness," said Kristian Lasslett, a professor at Ulster University who researches Western companies starting from Russia.

Inditex told FT that it is neither involved in its former Russian business nor supports it in any way, and that “the purpose of the transaction is to sell our business…while, while retaining our option to re-enter the market through a franchise agreement”.

Inditex, part of the first wave of companies that stopped operating in Russia after a full-scale invasion of Ukraine in February 2022, suspended operations in the country nine days after the attack.

Eight months later, it said it would sell it to "Daher Group" for undisclosed payments and announced that there were few more details about the deal.

While there is no entity called the Daher Group, Inditex told FT that it uses the phrase to indicate that the buyer is "part of an investment company belonging to the Daher family", whose Azadea Group owns the Inditex family in the Middle East.

Now owns a Daher-controlled entity operated by Russia - a company called Mixh R DMCC, whose website promises "continuity of outstanding fashion journeys" - established in September 2022. Soon after, it created a new brand, which now occupies many of the 243 Russian stores included in the deal. The former Zara, Pull & Bear, Bershka and Stradivarius stores are now brands of Maag, Dub, Ecru and Vilet, respectively.

According to trade data, the new owner relies on companies with the Spanish Group to source their products, which suggests that three major suppliers of Inditex are also top suppliers of Chiff Mixch, a subsidiary of Cixper R, in 2023 and 2024.

Inditex said it is normal for the industry to use the same suppliers for different retailers and “actively ensure the overall exclusivity of all products sold by their brands.”

However, images from the company's online store show that many new Russian brand designs are very similar to those of Zara and other Inditex brands. Inditex said it will not comment on the designs of other brands.

Hybrid R insists that it has nothing to do with Azadea and that “creative design and purchasing features are handled by an independent team in Dubai”. It said Azadea and Hybrid R DMCC are “although are completely separate entities with different stakes and no connected businesses”.

Corporate records show that the mixture is owned by Hassan Ghaleb Daher and Mohamed Ali Ghaleb Daher, two of the four co-owned azadea brothers.

In addition to the similarities of these items, Maag launched its first social media campaign for the Spring/Summer 2023 series, shooting around the same location as the Zara Collection at about the same time. Both were shot in Lanzarote by the same Spanish production company, according to the brand’s Instagram post. Lanzarote is “a common destination for image production in the fashion industry,” Inditex said.

According to company filings, two months after Inditex announced the deal in December 2022, Inditex remitted 9.1 billion rupees to its Russian business, worth about 120 million euros, which was worth about 120 million euros at the time.

Nataliia Rybalko, a researcher at the Kiev School of Economics, studied the exit of Russian multinationals, said she had no other examples of thinking about Western companies putting their money into the Russian business they sell.

“Instead, when leaving Russia, the company withdraws as much money as possible before selling,” she said.

Paul Ostling, former global chief operating officer of EY, has previously served as chairman of the audit committees of numerous Russian companies, said that "common sense, operationally" is "you usually don't invest in assets you dispose of."

He noted that New Fashion's 2023 financial statements show that Inditex classifies the asset as illiquid because the asset was sold when the money was injected. “So the question is, why put cash into non-current and held assets?”

Inditex said the operational cost is high, but there is no sales, i.e. "Even if the company wants to sell, it needs to fulfill the obligation of "employees, local authorities, landlords, etc." and injecting capital into the business is consistent with this situation.

It received more than 800 clothing from potential Middle East buyers, according to trade data, between the closing of Russian businesses in March 2022 and the sale of April 2023.

Inditex said it has agreed with Dahers that the new fashion will import goods before the sale is completed to "promote the buyer's rapid opening in Russia".

While Inditex and R-Mixed declined to disclose terms of sales or money for changing hands (if any), the Spanish group in January 2023 calculated the “realiable value” of the Russian business to be €183 million.

When asked about the proceeds from the sale, Inditex pointed to the 231 million euros termination of its Russian business and said "the revenue generated by the sale is not important".

People familiar with Western retailers’ operations in Russia pointed out that Inditex’s arrangement with Dahers is unusual, which does not include traditional repo agreements that typically allow companies to repurchase sold entities at a certain price for a specific time.

Instead, according to the disclosed terms of the transaction, the so-called Daher Group is "obligated" to arrange Inditex's franchise agreement in Russia "immediately" if the market conditions change.

According to people familiar with the arrangement, dozens of Inditex employees, including designers, brand directors and buyers, moved to the UAE to work for the so-called Daher Group.

According to their LinkedIn page, nine Inditex staff moved in 2022, and the rest have since joined several Inditex alumni that the UAE company has hired. According to LinkedIn, a man hired by R Chim as shoes from Inditex, he took on shoes in March 2023 and rejoined the Spanish group last month.

Inditex said it offered more than 800 voluntary leave in 2024, a figure that matched the average of previous years, noting that under Spanish labor laws, employers do not grant this situation, but rather “worker rights that employers must grant.”

At least one employee of the Dubai-based holding company is still among Inditex employees during the leave, according to people familiar with the Inditex-Daher arrangement structure.

Previously unreported details of Inditex's sale of its Russian operations suggest that the Spanish group is better positioned than most Western retailers to re-enter the Russian market.

Russian media reported this year that Inditex will soon return to the market despite those working with Russian Western companies dismissing the report's premature report due to a wider settlement between Moscow and the United States. Inditex declined to comment on what it calls "misleading rumors."

"It seems to be part of a pattern I have observed in some cases where companies leave Russia and the assets are placed in the UAE in the name of these well-planned holding companies where information is almost impossible to find, so they cannot be reviewed," Lasslett said.

“For some Western companies (such as Inditex), Russia is a huge profitable market.

Inditex said its financial statements “reliable, accurate and precise detailing the interpretation of the transaction.” It added that it "does not comment on opinions, understandings or conclusions based on informed and accurate analysis".

Other reports by Chloe Cornish in Dubai