Russian Clothing Retailer Zolla Closes 35 Stores Amid Profit Decline

The Russian clothing retailer Zolla has made the difficult decision to shut down 35 of its retail stores in response to a substantial decline in profitability. According to data published by The Moscow Times, the company concluded the year 2025 with a total of 457 stores, which marks a decrease of 35 locations compared to the 492 stores it operated at the end of 2024.

In 2024, despite facing economic challenges, Zolla managed to open 24 new retail locations. However, this expansion did not alleviate the financial troubles the company encountered. Zolla's revenue for the past year remained stagnant at 25.6 billion rubles, indicating a lack of growth. Meanwhile, the company’s expenses surged, leading to a net profit that plummeted more than fivefold to just 429.6 million rubles, down from 2.3 billion rubles the previous year.

The closure of Zolla's stores occurs against the backdrop of a broader crisis in the clothing retail sector in Russia. Forecasts suggest that by 2026, as many as 40% of retail outlets selling clothing in the country could shut down. Market participants note that several factors are impacting the sector, including a decrease in consumer demand, rising rental costs, new taxes, and competition from online marketplaces. Alexander Peremyatov, the founder of the clothing department store chain Slava Concept, commented, "Last year, retailers understood that a crisis had begun, but they did not grasp its depth. Now the situation has worsened. Due to reduced consumption, the number of unprofitable stores is increasing, and resources to support them are becoming insufficient."

In 2025 alone, 28 fashion brands exited the Russian market, 23 of which were domestic companies. Evgeniya Khakberdieva, the regional director of the NF Group's retail real estate department, noted that many companies have been scaling back their offline presence. For instance, O’stin closed 62 stores, Gloria Jeans plans to shutter 150 locations, and Finn Flare will only maintain stores in Moscow and St. Petersburg. Among foreign brands, Turkish companies Les Benjamins and Karaca Home, as well as Kazakhstan's Gaissina, have also closed their shops. According to the Union of Shopping Centers, the area occupied by clothing stores in shopping centers has decreased by 15% over the past year. Maria Gerasimenko, founder of Fashion Advisers, remarked, "The situation is critical for weak players, painful for large chains, though not catastrophic." She emphasized that the market is shifting from a growth model to one focused on survival.

The decline in clothing sales is closely linked to the economic constraints faced by Russian consumers. Data from the OFD Platform indicates that purchases of clothing, footwear, and accessories fell by 11% last year, while foot traffic in clothing stores within shopping centers dropped by 6%. Of approximately one thousand shopping centers in Russia, 80% experienced a decline in turnover.

Earlier reports indicated that Russian oil and gas revenues plummeted to their lowest levels since the onset of the COVID-19 pandemic in 2025. The Russian budget may face a significant deficit as early as the beginning of 2026 due to a shortfall in oil and gas revenues, a reality acknowledged by the government of the aggressor state. Ukrainian intelligence has also stated that the financial condition of medium and large enterprises in Russia continues to deteriorate, reflecting growing imbalances in the corporate sector.

More than half of large companies in Russia ended 2025 with a decline in profits, leading many to cut or completely freeze investment projects, with numerous firms preparing to lay off employees. On February 24, 2026, it was reported that around 300 companies in Russia are preparing to close. For the first time in history, 74 Russian regions found themselves in financial distress, indicating the onset of a wave of mass business closures.

The Russian Ministry of Finance has acknowledged that the hole in the treasury of the aggressor state is increasing at a record pace. Rosstat confirmed that over 17,000 Russian enterprises reported losses. VkusVill, the first major grocery retailer in Russia, has begun to scale back its retail network, closing 286 stores by the end of 2025. Magnit, the largest retail chain in Russia by the number of stores, also concluded 2025 with a net loss. On April 3, 2026, it was revealed that 22 Russian industries had entered a significant deficit.