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| Zara founder to receive £1.1bn payout after record sales | Zara founder to receive £1.1bn payout after record sales |
| (about 4 hours later) | |
| The multibillionaire behind the Zara retail chain has banked another £1bn after the fashion group reported record sales and profits. | |
| Amancio Ortega, Europe’s richest man, will receive €1.26bn (£1.1bn) from Inditex, the Spanish company he started more than four decades ago, which owns Zara and many other brands.. | |
| Ortega, 80, is still the biggest shareholder in Galicia-based Inditex and will receive the cash as dividend payments after the company revealed record financial results for 2016. | |
| The world’s fourth richest person and the wealthiest European, Ortega has a fortune estimated at $71.5bn (£58bn), according to the Forbes World’s Billionaires rankings. Only Microsoft’s Bill Gates ($86.bn), investor Warren Buffett ($78.3bn) and Amazon boss Jeff Bezos ($73.4bn) are wealthier. | |
| The world’s largest clothing retailer said it would pay shareholders a dividend €0.68 per share, up 13.3% year on year, as a result of the group’s record results. Ortega’s shareholding will generate the £1bn payout, and take the total earned by the billionaire from this single source to more than €6bn since 2010. | |
| The billonaire owns almost 60% of Inditex through two companies, Pontegadea Inversiones and Partler. He is fiercely private – rarely interviewed and hardly photographed – but he is a familiar face in La Coruña, the Galician city in northern Spain and a short distance from Arteixo, where Inditex is headquartered. | |
| Ortega opened the first Zara store in A Coruña in 1975. He was a local clothing manufacturer who had worked his way up from being a delivery boy at a shirtmakers and went on to build Inditex, now a global retailer. | |
| Inditex reported a 10% jump in same-store sales in 2016, after it invested €1.4bn in its warehouses, technology, new stores and online expansion. Sales grew in all markets, including the UK – where some rivals, such as Next and Marks & Spencer, have found trade tough. | |
| Net profit also rose 10%, to €3.2bn, while total sales rose to more than €23bn. | |
| Pablo Isla, the chair and chief executive of Inditex, said: “These are a positive set of results against a backdrop of strong prior-year performance. This is a direct result of the commitment, spirit and ambition of all the professionals comprising the group, their dedication to the company, passion for fashion and focus on sustainability.” | |
| The company, which also includes the Massimo Dutti and Pull & Bear brands, opened 279 stores last year in 56 markets, taking its total number of shops to almost 7,300. There were 51 new Zara stores, bringing the worldwide total to more than 2,200. | |
| Inditex employs 162,450 people after creating about 9,600 jobs in 2016. It has invested heavily in its warehouses in its home country, to allow clothing to be packed and dispatched at a faster rate. | |
| The company said highlights in 2016 included the rollout of a Zara range designed to mark the release of the Rolling Stones’ new album, Blue & Lonesome, and the Join Life collection, made with sustainable fabrics. | The company said highlights in 2016 included the rollout of a Zara range designed to mark the release of the Rolling Stones’ new album, Blue & Lonesome, and the Join Life collection, made with sustainable fabrics. |
| Zara Home launched its first perfume for men and women, as well as its first washing powder, fabric conditioner and ironing range. | Zara Home launched its first perfume for men and women, as well as its first washing powder, fabric conditioner and ironing range. |
| In the UK, Inditex refurbished its flagship Bershka store on Oxford Street in London and is currently expanding its Zara store in the capital’s Westfield White City shopping centre. | |
| The group has announced plans to hand employees more than €535m in 2017, over and above their ordinary salaries. | |
| Richard Chamberlain, analyst at RBC Capital Markets, said the results for 2016 were reassuring. “We view Inditex as a long-term global multi-channel winner in apparel. We see potential for it to generate durable low- to mid-teens growth over time,” he added. | |
| Zara’s fast fashion is speedy route to big profits | Zara’s fast fashion is speedy route to big profits |
| Zara’s record sales over the past year will surprise no one in the fashion industry who’s looked inside a store in the past 12 months. | |
| Like Céline or Johanna Ortiz but can’t afford them? Zara had the same looks at just 5% of the designer price. Yet despite spending nothing on advertising, the 10% increase in sales suggests Zara has transcended fashion-forward, mid-range shops such as Mango and H&M. It is now a status brand rather than just an affordable high street shop, with fans including the Duchess of Cambridge and street-style star Olivia Palermo. | |
| Long known for its knack for borrowing from the catwalk and repurposing for the high street in a more wearable way, Zara’s success also relies on trial and error. Shop assistants report back customer reactions, from complaints about lack of stock to style details – such as whether a top would look better with a boat neck – to their managers, who then provide feedback to designers. Their extraordinarily high turnover of stock (which is kept to a minimum, helpful for maximising profit) means that customers know they need to buy immediately or items will sell out – the ranges change week to week. | Long known for its knack for borrowing from the catwalk and repurposing for the high street in a more wearable way, Zara’s success also relies on trial and error. Shop assistants report back customer reactions, from complaints about lack of stock to style details – such as whether a top would look better with a boat neck – to their managers, who then provide feedback to designers. Their extraordinarily high turnover of stock (which is kept to a minimum, helpful for maximising profit) means that customers know they need to buy immediately or items will sell out – the ranges change week to week. |
| While the mark of a good high street store is to efficiently reflect what’s on the catwalk, Zara tends to mimic the more “youthful” trends. The wacky athleisure looks towards Vetements. The sculptured shirts (there are tens of styles) resemble Rosie Assoulin. While most high street stores produce one “it” item – such as Marks & Spencer’s pink coat from 2013 – Zara produces many, such as last year’s wide-legged tracksuit trousers or last month’s green print dress designed in the spirit of Baum und Pferdgarten’s long sold-out version. The new gender-neutral line is likely to take up the baton for March. But with stock changing each week, blink and you’ll miss this one too. Morwenna Ferrier | |