End of the line for Zara tsar who built a €9bn empire
He has made his mark on the world's high streets but Spain's greatest fashion mogul is shy – and, now, retiring
Thursday 13 January 2011
Amancio Ortega, the wealthiest man in Spain and perhaps one of the world's most reclusive moguls, has tiptoed into the spotlight this week by announcing his imminent retirement from the fast-fashion giant Inditex, parent company of the Zara chain, which he founded with a single store in La Coruna 35 years ago.
There were no photo opportunities, no dramatic goodbyes or self-celebratory pomp. The 74-year-old billionaire – who shuns interviews, rarely appears in public and once even dodged a meeting with the Spanish crown prince – simply sent a brief note to his 98,000 employees stating that he would soon ask Inditex vice-president and CEO Pablo Isla to take his place at the helm of the textile empire that brought affordable catwalk copies to the style-craving masses.
"Dear friends," he began. "Now is the moment, with great hope and responsibility, to propose that Pablo Isla be named executive president at the next board meeting." He also praised the "combination of youth and experience" of his successor. During Mr Isla's five-year tenure, the 47-year-old brought Zara and other Inditex brands to fashionistas throughout Asia and recently launched an online shopping site, Zara.com.
True to his style, the humble son of a railway worker who went on to occupy the ninth slot in Forbes' 2010 list of the world's richest men offered no specific explanation as to why he had chosen this moment to pass the torch. But Mr Ortega's age, coupled with the company's healthy performance during the worldwide economic slump, likely had something to do with it. His cheap-and-chic clothing stores – including Zara's sister brands such as Pull & Bear, Massimo Dutti, Bershka, Zara Home and a new accessories chain, Uterqüe – have managed to grow in tough times, with Inditex sales up by as much as 14 per cent in just the first three quarters of last year to €8.9bn (£7.9bn).
"The situation is optimal for stepping down," said Jose Luis Nueno, professor of marketing at IESE Business School in Barcelona. "The company has shown its ability to drive under any conditions and Ortega is getting close to 75 but is in good health. It's the right time to tell the market that the company is in shape to put another person at the top. You don't want to make that decision if he is suddenly hit by illness or the company is doing poorly."
Mr Ortega's successor already occupies the limelight to the apparent relief of his plain-talking boss, who will retain his 60 per cent stake in the company. Mr Isla handles relations with the government, the stock exchange and even appears at shareholders meetings while the heavy-set founder of Zara toils in the shadows. Mr Ortega is so low-key that, in 2001 when Inditex went public and the stock's value climbed, he reportedly celebrated by watching the news for 15 minutes on television and eating lunch in the company cafeteria.
"When the Prime Minister of Spain called a meeting of the top 20 executives to discuss the economic crisis, they all came except for him," Mr Nueno said.
Mr Nueno believes Mr Isla's appointment signals that the Inditex presidency will not be a "dynastic post". But some observers see it as a generational stop-gap, a move to ensure continuity of the family business by a loyal, well-liked manager until the heir, Mr Ortega's youngest daughter Marta, is ready.
Like her father, who began his working life as an errand boy, Marta, 26, has been slowly working her way up the ladder of the company her father built, beginning as a clerk at a Bershka store in London in 2007. She has since trained in Barcelona and Shanghai and most recently landed at Inditex headquarters in Arteixo.
Mr Ortega may be considered a "publicist's nightmare", but he is among the most talked-about figures of the Spanish business world. His rags-to-riches life story with humble beginnings in Galicia, a poor, rural region of northern Spain, has inspired a generation of Spanish textile entrepreneurs. Some of the details are sketchy, gleaned from interviews with friends and co-workers wary of betraying his desire for privacy. But the storyline is consistent: With no known formal education, Mr Ortega began work as a delivery boy at an upscale skirt-maker at age 13, and went on to become a tailor's assistant. As he observed the distributor's mark-up, he learnt the value of controlling all steps of the production and distribution process, a lesson he applied to the Zara chain.
His first stroke of copycat genius came in the 1960s, when he managed a lingerie shop. He spotted an expensive, flowered designer négligée, and for weeks he fine-tuned what would become his first upscale imitation in his sister-in-law's sitting room, cutting pieces by hand. It sold. Other styles followed.
At age 27 he set up his first clothing factory, and in 1975, he opened the first Zara, with its sleek window display and rapidly rotating collections. It stood opposite a traditional department store, as though symbolising the challenge to come.
Today Zara has become as much a symbol of Spain as paella and sangria, and Inditex is the world's largest retailer, surpassing rivals H&M and GAP. The company is studied in business schools around the world. Its success is attributed in part to an efficient and agile stocking system, which enables stores to immediately adjust the supply on the racks to customer whims.
Mr Ortega, meanwhile, has quietly amassed his $25bn fortune. According to Forbes, he owns properties in Paris, London, Lisbon and Miami, a horse-jumping circuit, an interest in a football league, and he has investments in gas, tourism and banks.
The few photos of the camera-shy billionaire appear blurry, like Paparazzi snaps stolen on the sly. He has never been caught wearing a tie (except at his wedding). He didn't pose for an official portrait until 2001, on the occasion of the company's first annual report.
He does not enjoy working with suited financial types. He reportedly suffered from investment-banker overload while preparing the initial public offering of Inditex stock. "We could see it was absolute torture for him," a banker told reporters at the time.
According to Mr Nueno, he seldom uses business jargon and enjoys thinking about store layout and clothing design more than expansion strategy despite the vertiginous rate of store openings, which at one point reached one every 36 hours. He will very likely continue working after retirement.
"I don't think Mr Ortega is about to go play golf," Mr Nueno said. "He is interested in the soul of the company. I don't think he'll leave this activity until the day he passes."
Keeping it in the family
The Apprentice presenter applied tough love when grooming his children for business – he sent them to work in McDonald's. Now Lord Sugar's son Daniel runs Amsair and Amsprop, the empire's aviation and property wings.
Emilio Botin, head of Spanish banking giant Santander, named his daughter Ana Patricia as the bank's chief executive last year. She is the first female Botin to preside over Spain's biggest bank after three generations of male chiefs.
He may have dropped out of Harvard, but media mogul Rupert Murdoch's youngest son James is now chief executive of the Europe and Asia divisions of the Murdoch brand News Corp. His canny business sense makes him the favourite to inherit his father's enterprises.
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