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Inditex founder's daughter to chair company, new CEO named

Published 11/30/2021, 06:33 AM
Updated 11/30/2021, 12:48 PM
© Reuters. Pablo Isla, Chief Executive Officer of Spanish group Inditex, stands at the start of a news conference to present the company's 2011 annual results in Madrid March 21, 2012. REUTERS/Sergio Perez/File Photo
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By Inti Landauro and Jesús Aguado

MADRID (Reuters) -Marta Ortega, daughter of the founder of Spanish fashion retailer Inditex (MC:ITX), will replace Chairman Pablo Isla, who led the company's global expansion for more than a decade, in a succession some analysts called premature.

Ortega, 37, takes over as chairwoman of the group that owns the Zara brand in April with a new chief executive, the last step in handing over to a new generation that began a decade ago, the company said.

Shares in Spain's largest listed company were down 5.8% by 1300 GMT.

Isla told a video news conference it was the right time for the change thanks to the company's solid position, with sales in the second quarter climbing above 2019 pre-pandemic levels.

"These changes that we are announcing today are very well thought out changes, which are part of a process within the company and we understand that now is the right time to address this new stage," Isla said.

"With the changes...we are confident that the company will continue to develop successfully," he added at a virtual briefing where he was accompanied by the incoming CEO Oscar Garcia Maceiras but not by Marta Ortega herself.

Isla dismissed Tuesday's share fall as a short-term move.

He had taken over from Amancio Ortega, now 85, as chairman in 2011 after six years as deputy chairman.

Under Isla, Inditex's share price rose eight-fold and its market value skyrocketed to almost 93 billion euros ($106 billion), while over the same period shares of its main rival H&M climbed by about 50%.

Most brokers said Ortega was the natural successor to her father but said she was taking the lead faster than expected, along with a young CEO with little retail experience.

Oscar Garcia Maceiras, who became general counsel and board secretary in March, takes over from Carlos Crespo, who spent two years as CEO and will stay on as Chief Operating Officer.

'A LOT TO PROVE'

"We think that the changes are bad news for Inditex," Spanish investment firm Alantra said. "We would have expected a more orderly and smoother transition period, with Isla supervising in a non-executive role."

Brokerage Kepler said the reshuffle was "moderately negative", adding: "Both Marta Ortega and the CEO Oscar Maceiras have a lot to prove when it comes to their ability to run this big monster in the middle of the COVID crisis."

But other analysts said Inditex, which fared well during the pandemic, was unlikely to see a shift in strategy under the changes and was relatively well-positioned to manage global supply chain issues.

"Given the orderly handover process and long-term strategy of the group, these changes are unlikely to provide any scope for a material change in strategic direction," Deutsche Bank (DE:DBKGn) analyst Adam Cochrane wrote.

Ortega, known for her equestrian passion, has worked for the company for 15 years, starting as an assistant in one of the company's cheaper retail brands, Bershka. Isla said she would continue to oversee Zara's image and fashion business.

© Reuters. FILE PHOTO: Marta Ortega, daughter of Amancio Ortega, founder and former chairman of Spanish global fashion group Inditex, competes during Madrid Horse Week in Madrid November 28, 2014.  REUTERS/Susana Vera/File Photo

Ortega said in a statement: "I have always said that I would dedicate my life to building upon my parents' legacy, looking to the future but learning from the past and serving the company, our shareholders and our customers."

Amancio Ortega, the world's 11th wealthiest man with $77 billion according to Forbes, still owns 59.29% of Inditex, while Sandra Ortega, a daughter from his first marriage, is the second largest shareholder with 5.05%, Refinitiv data showed. ($1 = 0.8803 euros)

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