Zara fashion giant springs surprise by naming founder’s daughter as new chairperson (Irish Examiner)

30 Nov (Irish Examiner).- Alantra Equities called the management changes “bad news” as Mr Isla is difficult to replace and the new CEO doesn’t have experience in retail

MACARENA MUNOZ, 30 Nov (Irish Examiner).-

Inditex — the Spanish fashion retailer that owns Zara — 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 chairperson next year, a long-awaited generational change that surprised investors because it was accompanied by the immediate replacement of chief executive Carlos Crespo with Oscar Garcia Maceiras.

The shares fell as much as 5% 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 six-fold to €86bn.

There had been growing speculation for more than a year that Mr 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,” said 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.

Ms Ortega will become non-executive chairwoman as of April 1, when Mr 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.

Ms Ortega will need to deal with new competitive threats as online clothing retailers SheIn and Zalando gain market share. Alantra Equities called the management changes “bad news” as Mr 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 Ms 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 €61bn.