The Board of Directors of Inditex resolves the appointment of Marta Ortega as Chairwoman, and Óscar García Maceiras as CEO

The Board of Directors of Inditex, at the proposal of its Chairman Pablo Isla and its founder Amancio Ortega, and following the proposal of the Appointments Committee, has approved the appointment of Marta Ortega Pérez as Chairwoman of the Group, with the status of dominical director, an appointment that will be effective as from 1 April 2022, according to the relevant fact published today by CNMV (Spanish National Stock Market Commission).

Likewise, Óscar García Maceiras, until now General Secretary and Secretary of the Board, has been appointed CEO of Inditex. Óscar García will take over from Carlos Crespo González, who until now and for approximately two years has had a long career in the company after joining in 2001.

“We are enormously grateful to Pablo Isla for his extraordinary work and dedication over all these years. I would like to highlight his immense contribution, not only to our Group but also to the fashion industry in general. I have lived this company since my childhood and I have learned from all the great professionals I have worked with over the last 15 years. I have always said that I would dedicate my life to developing the legacy of my parents, looking to the future but learning from the past and in the service of the Company, our shareholders and our customers, wherever I am most needed. I am deeply honoured and committed by the trust that has been placed in me, and enormously excited about the future that we are all going to undertake together. Marta Ortega.

The new organisational structure incorporates a Management Committee, made up of executives from different corporate and business areas and with a long track record in the Group, as follow:

• Carlos Crespo González, General Manager of Operations, Sustainable and Digital Transformation, INDITEX, S.A. Digital, INDITEX
• Pablo del Bado Rivas, General Manager, PULL&BEAR
• Miguel Díaz Miranda, Chief Financial and Operations Officer, ZARA
• Ignacio Fernández Fernández, Chief Financial Officer, INDITEX
• Javier García Torralbo, General Manager of e-Commerce, ZARA
• Begoña López-Cano Ibarreche, Chief People Officer, INDITEX
• Beatriz Padín Santos, Women’s Director, ZARA
• Jorge Pérez Marcote, General Manager, MASSIMO DUTTI
• Óscar Pérez Marcote, General Manager, ZARA

The appointment of Carlos Crespo in 2019 was a foreseeable move, as he was considered until then, in fact, the number 2 of Pablo Isla, until now the Chairman of the Board of Inditex (and former CEO of the group), after his resignation today. His position as the group’s internal audit director had given him extensive knowledge of all the company’s departments. He was considered by many to be a “man of the house” and this led many to believe that he would be accepted by the whole team. However, it was also pointed out at the time that he had little connection with the product area, where Amancio Ortega’s trusted managers were and are to be found.

For some time now, there have been rumours of a change and reorganisation of the group’s management structure, motivated by the distrust of some of the executives close to Amancio Ortega, which presages the imminent departure of Carlos Crespo as CEO. Who will be his successor? This morning it was confirmed that he will be succeeded by Óscar García, until now Secretary General of the Board.

Until now the composition of the Board was as follows:

Source: www.inditex.com/es/compliance/buen-gobierno-corporativo/consejo

According to the last Annual Corporate Governance Report of Inditex, the chief executive officer (Carlos Crespo) as well as the executive chairman (Pablo Isla), would be entitled to receive a gross severance payment for an amount equivalent to 2 annual payments calculated on their respective fixed remuneration established for the current year, in the event that their contract is terminated unilaterally by the Company (as seems to have been the case), as well as the resignation of the managing director or the executive chairman due to certain causes (among these, company succession, or change of ownership of the company affecting more than 50% of the share capital or voting rights, provided that, at the same time, there is a significant renewal of the governing bodies or a change in the content and approach of its main activity, if the request for termination is made within 6 months following the occurrence of such succession or change. For these purposes, no succession or change of ownership shall be deemed to exist in the case of a direct or indirect family succession in the ownership of the company.

Pablo Isla and Carlos Crespo’s departure joins other departures that have taken place in recent months. Rodrigo Loderio (former Security Director), Antonio Abril Abadín (former General Secretary of the Board), Ramón Reñon (former Deputy General Manager to the Chairman), Ramón Rubio (former Financial Manager of Massimo Dutti) and Jordi Blasi (former Head of Zara’s men’s division) are some of the executives who have left the company.

Until now, Inditex has known how to listen to the market and take advantage of the right moment to review its structures and adapt its processes.

Related article: Inditex the company with the best corporate reputation

It was at this time when El Corte Inglés opened its shareholding to foreign investment, and it was the Qatari Sheikh Hamad Bin Jassim Bin Jaber Al Thani who acquired 10% of the company’s share capital for 1 billion euros. The company was valued at 10 billion euros, although this valuation was debatable and could have been slightly lower.

However, a few years later, in 2018, after suffering several years of family war and a change in the composition of the Board of Directors, the experts pointed out that the value of the company would not reach more than 4 or 5 billion euros.

This was the moment to analyze what strategic direction El Corte Inglés should take, being the European leader of department stores in the era of digitalization, something that seemed to be not exactly a compliment, given the massive closures and restructuring that were taking place worldwide and the consolidation of Amazon as a technological leader. Companies comparable to El Corte Inglés in the United States were closing, it was the “Retail Apocalypse”, as The Wall Street Journal had dubbed it at the time.

Moving from a model based on shop square metres to one in which El Corte Inglés could compete with the e-commerce giants was one of its major pending tasks.

The company’s proposal since then has involved the adoption of some vital measures, many of which are already a reality, and have been and are:

• Focus on e-commerce and omnichannel, also supported by a new App;
• focus on quality products and services and the shopping experience;
• transform its logistics process;
• create a real estate unit;
• relaunch Viajes El Corte Inglés and create its own training school;
• integrate Sanchez Romero to lead the premium food segment;
• expand its financial services;
• review and reinforce its corporate social responsibility policy; and
• launch a new shopping card in alliance with Mastercard.

Thus, the objective of the 2021-2026 Strategic Plan, which was approved in July this year, is to double the result with an Ebitda of 1,700 million euros, reduce debt by 60% (at the close of the 2020 financial year, it accumulated a debt of 3,811 million) and multiply online sales to represent 30% of the group’s turnover.

The reduction of this debt was made possible a few days ago thanks to the entry into the share capital of the Mutua Group (formerly known as Mutua Madrileña) with an 8% stake for 555 million euros. This agreement also includes the acquisition of 50.01% of the insurance division of El Corte Inglés for a further 550 million euros. In total, 1,105 million euros, which would be largely used to reduce debt. This indicates that the valuation of the company, which has been used in this last operation, has improved with respect to the 2018 estimates, and is 6,937 million euros.

All this suggests that a management model that is closer to the customer, that expands services and that is constantly being adapted, may be the key for not only El Corte Inglés but also for other businesses in the sector to be able to face the economic and social changes that are coming.

“Focusing obsessively on the customer as a priority is by far the best way to protect the vitality of Day 1 (…) customers are always wonderfully dissatisfied, even when they tell us they are happy. Even when they don’t know it, they always want something better. Staying on Day 1 requires patiently experimenting, accepting failures, planting the seeds and protecting the little trees that begin to grow (…) Day 2 is stagnation. Followed by irrelevance. Followed by painful decline. Followed by death. And that’s why it’s always Day 1 here. It is true that this kind of decline can happen very slowly. An established company can stay on Day 2 for decades, but the end result will come” (Bezos, 2017)