Michael Kors Russian Distributor Seeks to Stave Off Sales Drop

BNS Group, the Russian distributor for Michael Kors Holdings Ltd. and PVH Corp.’s Calvin Klein, is seeking to limit price growth to keep same-store sales level this year as the economy slides into recession.

The weak ruble will push up prices and may buoy revenue in the Russian currency even if consumers buy fewer items of imported apparel, according to BNS Chief Executive Officer Denis Bogatyrev.

The ruble has continued its slide this year following a 46 percent plunge last year against the dollar, the worst performance of about 170 currencies tracked by Bloomberg after Ukraine, accelerating inflation to a five-year high and eroding consumer spending. The economy has been battered by falling prices for oil, the country’s biggest export, and with the effects of U.S. and European sanctions over President Vladimir Putin’s incursion in Ukraine.

“Large, focused companies that work with international brands and have a wide distribution network will overcome the crisis and grow stronger,” Bogatyrev said in an e-mailed response to questions. “Companies that are lacking focus and have a high debt burden may have to leave the market.”

Sales surged in December, exceeding forecasts, as Russians rushed to buy imported goods before prices were adjusted for ruble weakening, he said. BNS is now trying to keep them coming back, according to Bogatyrev.

Closing Stores

“We are make all possible effort to limit the growth of prices for consumers, including talks with suppliers about lowering their prices,” Bogatyrev said. “We may consider closing some unprofitable stores.”

BNS will largely refrain from new openings in the first half to get a sense what’s happening to consumer activity, Bogatyrev said. One exception will be a flagship Michael Kors store within walking distance of the Kremlin in Moscow that’s set to welcome customers in March. The distributor will decide on second-half openings by the end of April, he said.

The company convinced its landlords to fix rental payments, without fully adjusting them to the ruble’s decline, Bogatyrev said. The company started the talks a year ago and entered the crisis well-prepared, he said.

BNS, which started business in 1997 opening the first Mexx store in Russia, now runs more than 200 stores of global brands that also include Armani Jeans and Topshop. It will continue selling Mexx in Russia even after the Dutch fashion brand was declared bankrupt last year, Bogatyrev said.

“The bankruptcy of the legal entity didn’t affect distributors,” he said. “We are already receiving the new collection, and hope this situation won’t affect customers.”

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