Inditex Hands Founder’s Daughter Reins in Surprise Shakeup
Inditex SA announced a surprise revamp of its top management by elevating the founder’s daughter and naming a new chief executive officer after just two years.
Marta Ortega, 37, will become chairwoman next year, a long-awaited generational change that surprised investors because it was accompanied by the immediate replacement of CEO Carlos Crespo with Oscar Garcia Maceiras. The stock fell as much as 5.3% on investor concern the new leadership has less of a track record.
The reshuffle marks the exit of Executive Chairman Pablo Isla, 57, who spearheaded Inditex’s expansion phase for more than a decade, bolstering the company’s market value sixfold to $100 billion. There had been growing speculation for more than a year that Isla was keen to move on. At the same time, Marta Ortega had been slowly gaining more public exposure and increased involvement in the business, founded by her father Amancio, who is 85 and owns a 59% stake.
“Although this transition phase seemed to have been prepared internally, the departure of Pablo Isla may leave a great void in the near-term,” wrote Cedric Rossi, an analyst at Bryan Garnier.
Inditex became one of the first major European clothing retailers to reach pre-pandemic levels in sales and profit as the Zara owner benefited from a push into online. Earnings more than doubled in the six months through July, the company previously reported.
Ortega will become non-executive chairwoman as of April 1, when Isla will finish his 17-year career at the retailer. Isla told reporters the company had been preparing the changes behind the scenes for some time.
Ortega will need to deal with new competitive threats as online clothing retailers SheIn Group and Zalando SE gain market share. Alantra Equities called the management changes “bad news” as Isla is difficult to replace and the new CEO doesn’t have experience in retail.
“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,” Marta Ortega said in a statement.
While Ortega has held various positions at Inditex over the past 15 years, she never has had a top management title. She’s been most involved in strengthening Zara’s brand, introducing several premium collections.
Marta Ortega is also less publicity-shy than her reclusive father, hobnobbing in glitzy social circles and showing up at big fashion events across the world. Her dad is Europe’s third-richest person, with a net worth of $71 billion, according to the Bloomberg Billionaires Index.
What Bloomberg Intelligence Says:
Suggesting some dissatisfaction with Inditex’s recent performance -- despite the transition to a greater digital participation matching that of its apparel-retail peers -- the long-standing Executive Chairman Pablo Isla is being replaced by Marta Ortega Perez, the daughter of the company’s founder. In addition, a new CEO -- who only joined the company in March -- will replace the recently appointed successor.
-- Charles Allen, BI retail analyst
New Inditex CEO, Chairman Imply Performance Shortfall: React
Inditex’s approach contrasts with Swedish rival Hennes & Mauritz AB, which took a step away from its founding family last year when it named Helena Helmersson as CEO.
CEO Crespo is returning to his former job as chief operating officer after a term marked by the pandemic, which caused record drops in retailers’ revenue. His replacement, Garcia Maceiras, joined Inditex eight months ago as general secretary and secretary of the board. The lawyer previously worked at Spanish banks including Banco Popular and Banco Santander SA.
The retailer is also creating a new management committee, formed by the heads of the different brands together with some other executives, such as the head of human resources and the chief financial officer.
That committee will “beef up” Inditex’s leadership during the transition, Bryan Garnier’s Rossi said.
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