Shoe Intelligence writes it. The war hits the German shoe industry after a strong 2021. The Russian footwear market faces a perfect storm. Following the G7's announcement regarding Russia sanctions, US imposes Russia import/export ban on luxury goods, including footwear, with extension to any transaction in USD for these goods.
After enjoying a strong rebound in sales in 2021, German footwear manufacturers now believe that inflationary pressure on raw materials, caused initially by bottlenecks generated by the Covid-19 pandemic and magnified by geopolitical uncertainty stemming from the Russian-Ukranian conflict, will strain earnings margins. German footwear brands also believe that Russia will not be a viable market for the foreseeable future following the international sanctions imposed on the country.
Meanwhile, the Russian market is braced for major turbulence, after dozens of footwear brands pulled out of the country after the invasion of Ukraine and the subsequent sanctions.
Following the G7’s announcement regarding Russia sanctions (see post) and a related announcement from the White House (see post), the US imposed further Russia and Belarus sanctions on Friday. Remarks by President Biden. These are summarised below.
US President Biden issued Executive Order (E.O.) on Prohibiting Certain Imports, Exports, and New Investment with Respect to Continued Russian Federation Aggression. Letter to the Speaker. The E.O. prohibits (between others):
- The export, reexport, sale or supply from the US, or by a US person/entity, of “luxury goods” to any Russia-based person/entity. A BIS Rule extended this ban to end users in Belarus. Press Release & Press Release. According to the Rule, luxury goods include certain:
- Alcoholic beverages; tobacco products; beauty products; leather products; textiles; designer clothing; footwear; diamonds; pearls; precious gems and metals; and vehicles.
- New investment by a US person/entity in any sector of the Russian economy, as determined by the Secretary of the Treasury.
- The export, reexport, sale or supply from the US or by a US person/entity of USD denominated banknotes to the Russian government or any person/entity located in Russia.
- Any approval, financing, facilitation or guarantee by a US person/entity of a transaction by a foreign person/entity where that transaction would be covered by these prohibitions if performed by a US person/entity or within the US.
