, ,

Click aquí para leer en español

With a net worth of more than $71 billion, Amancio Ortega has become one of the richest men in the world thanks to the stock market revaluation of the company that he founded and still controls with almost the 60% of the shares. The foregoing of Inditex are founded in the 60s, when Ortega started his own little firm, making dressing gowns and other clothes for women, but it wasn’t until 1975 when the first Zara store, the main insignia of the Group, was opened. After some years of national expansion, and the opening of the first logistic centre, in 1985 Inditex (Spanish acronym of Textile Design Industry) was founded as the holding company of the Group. In the late 80s, Inditex started to expand internationally, and in the 90s, Pull&Bear, Massimo Dutti, Berskha and Stradivarius were incorporated or founded organically, setting up a genuine fashion industry holding. In the first decade of the 21st Century, the Group founded Zara Home and Uterqüe, the last subsidiary of the holding.

Nowadays, Inditex has presence in 94 markets, with more than 7,400 stores, 7,000 factories, 160,000 employees and 1,800 suppliers. All of that allows the Group to have a turnover of more than €23 billion, that yield a net profit of more than €3.1 billion. Nevertheless, the most impressive of Inditex are not their current numbers, but the historical evolution, despite of not using external financing, paying an uninterruptedly and growing dividend and the constant increase in net cash in the balance sheet.

Since 1996, the annual growth rate of sales and the operating profit have been 17-18%, while net profit has grown at a 21% annual rate, which is an extraordinary success, since it implies that the EBIT has gone from 150 million to 4 billion in two decades. This performance of the economic data has done that the shareholders did obtained a total return of 22% annualized since the company went public.

Our eight brands share the same main objective: responding to the needs of our customers.

We place the customer at the very centre of our business model. Knowing and delivering exactly what our customers want demands meticulous organisation, close attention to detail, and industry-leading technological innovation in every part of our value chain.


The extraordinary evolution of the Group is not by chance, but due to the philosophy and managing values based on the satisfaction of the necessities of their clients through innovation and good service. So that, the Group states that our eight brands share the same main objective: responding to the needs of our customers. We place the customer at the very centre of our business model. Knowing and delivering exactly what our customers want demands meticulous organisation, close attention to detail, and industry-leading technological innovation in every part of our value chain”. In this sense, a big share of capital expenditures has been done “in new technologies [that] have led to some outstanding customer-focused innovations”. The BrandZ™ Top 30 Most Valuable Spanish Brands 2017 sorts Zara as the fourth most innovating Spanish company, and says that “innovation is not just the preserve of technology brands. Any brand that is seen as doing something new, or setting trends for their category, will get talked about and tried. When trial goes well, that can lead to a longer-term relationship and, ultimately love, which correlates strongly with innovation. Innovation can mean developing a product that does something different, providing an innovative service, or delving into a new category. Innovation creates a predisposition for sales”. In relation with this, Inditex shows in their every day’s operations that they take seriously the importance of innovation. In short, through their approach of client satisfaction and the importance of innovation, Inditex has achieved to offer fashionable clothes, meeting client’s expectations with low prices. That is, the textile group has reach satisfactorily to sell good, nice and cheap clothes. This business model is known as “fast fashion”, and Inditex is the global leader thanks to the integration of the key elements of fashion production: design, manufacture, distribution and retail, that allows the company to develop a business strategy whose essence consists in selling clothes to the latest fashion at low prices.

Therefore, the secret of the success of Inditex is the capacity to adapt to the necessities of their potential clients thanks to the flexibility that gives the constant innovation of the Group. Furthermore, from an entrepreneurial point of view, the daily management of the economic activity and the capital management is extraordinary, and here influences the explicit control of Amancio Ortega.

The good management is materialized in a good assignment of capital, investing in business expansion in countries with good potential, without buying other companies with premia, and minimizing the level of debt. On the other hand, the direction focuses their efforts in maximizing the return on capital and the cash generation, while paying a recurring dividend.

The Group is made up by eight commercial brands, each of them with their own “personality”, among which stands out the worldwide known Zara, with a value of more than 25 billion dollar, according to the Ranking BrandZ™ Top 30 Most Valuable Spanish Brands 2017. Moreover, it is the 34th most valued brand in the world, and the second in the fashion industry, after Nike, and, also the first in Spain. Among the rest of the brands, Massimo Dutti, Stradivarius, Berskha and Pull&Bear appear in the Spanish ranking. This shows that Inditex has achieve to place their brands among the most valued ones in their reference markets, which allows to obtain high returns on their investments thanks to the competitive advantage that it implies. So that, the Ranking BrandZ™ Top 30 Most Valuable Spanish Brands 2017 says that “the apparel brands that serve Spanish consumers so well and that have taken Spanish fashion
to the world utterly dominate the ranking in a way that we have not seen in other markets and which marks out the Spanish Top 30 as distinct. The Inditex brands, led by Zara, have not only changed the way Spaniards shop, but have transformed the clothes shopping habits of consumers the world over, particularly the young audiences that favor what has come to be known as “fast fashion”.

These rankings reflect on real numbers in the company. As an example, the two brands that generate higher sales to the group, Zara and Berskha, have a return on capital of 30% and 58% respectively. Zara reports more than half of the total EBIT, and, with 2.213 stores worldwide generates €15 billion in sales, and an operating profit of 2.8 billion. The rest of the brands have a combined return on capital of 40%, which make the final return of the Group of 33%.

Because of these, Inditex is the company that every businessman would like to create, manage and own, but also the company in whose capital would like to participate every long-term investor. The main characteristics of the company are the brand competitive advantage, which yields an extraordinary high return on capital, the shareholder’s structure, dominated by a person which implies directly in the company, the conservative financial structure, with 6 billion in net cash (31% of total assets), and, specially, its flawless business development among the last decades.