Spain’s richest man, founder of clothing label Zara, stepped down as chairman of his retail empire on Tuesday, ushering in Inditex’s 47-year-old chief executive as his successor.
The board backed 75-year-old Chairman Amancio Ortega’s decision to hand over to CEO Pablo Isla at the clothing giant’s headquarters in northern Spain, accompanied with a golden hello in the form of a share package worth about 13.7 million euros.
Picked by Inditex using a headhunter six years ago, Isla is seen as a high-flyer in corporate Spain, and is tipped by Spanish media as a possible economy minister if the conservatives win power at the next elections as polls predict.
Most analysts view the passing of the baton to Isla, who will be joint chairman and CEO, as unlikely to be followed by radical changes at the cash-rich company which has become the largest clothes retailer in the world in terms of sales.
Isla’s total remuneration makes him the best-paid director in Spain, ahead of Santander’s Chief Executive Alfredo Saenz, Telefonica’s Chairman Cesar Alierta and Iberdrola Chairman Ignacio Sanchez Galan, estimates newspaper El Pais.
Billionaire entrepreneur Ortega was absent from Tuesday’s shareholder meeting, as he has been from every one since the company listed in May 2001 and from the inaugural ringing of the bell at the Madrid IPO.
The low-key handover was in keeping with the character of Ortega who closely guards his privacy and has managed to stay out of the limelight while making flagship Zara a household name in some 80 countries.
The firm has shunned most formal advertising and the use of celebrity models, building its name through word-of-mouth.
Unlike his younger successor who trained as a lawyer, Ortega left school at 13 to get a job when he discovered his mother owed money. He began working as a runner in a store where he observed what clothes customers demanded.
Along with first wife Rosalia Mera, Ortega began designing and making items like dressing gowns and underwear at home. The couple quickly expanded the number of retailers they sold to before realising they could make more money selling directly to customers.
Thirty-six years after opening the first Zara store, Inditex now has eight labels including low priced underwear brand Oysho and upmarket fashion store Massimo Dutti. Its different brands have a total of more than 5,000 stores, with more than one new shop opening a day on average.
Ortega has amassed a personal fortune of some $31 billion, according to Forbes’ magazine’s latest rich list, making him the seventh richest person in the world.
Not only does Ortega remain the main shareholder, but Isla has little need to change a winning formula.
Inditex has weathered the crisis better than rivals through its aggressive expansion programme, particularly targeting new markets like Asia and eastern Europe.
In June, Inditex posted first quarter profit of 332 million euros and an 11 per cent sales hike to 2.96 billion.
Business and fashion analysts think the secret of Inditex’s success has been its tight control of all parts of the production process, with design teams at its Arteixo plant working closely with sales teams managing shops.
Catwalk trends can be delivered to shops as fast as two weeks.
Source – Reuters