Ortega Tops Buffett With Zara Fortune of $53.6 Billion
By Alex Cuadros – Oct 31, 2012 5:02 AM GMT+0100
Bloomberg Markets Magazine
Inside Inditex SA (ITX)’s concrete-and- glass headquarters in the Spanish town of Arteixo, a lithe woman slips into a dress that a seamstress working amid buzzing sewing machines stitched together just minutes earlier. A half circle of designers — looking like models themselves — nod approval.
Amancio Ortega, Inditex SA’s founder and former chairman, is richer than Warren Buffett with a $53.6 billion fortune. Photographer: Dusko Despotovic/Corbis
Oct. 31 (Bloomberg) — Bloomberg’s Matthew G. Miller and Alexander Cuadros discuss Bloomberg Markets’ inaugural list of the world’s richest people. The roster is a snapshot of Bloomberg’s exclusive daily wealth ranking, the Bloomberg Billionaires Index, which identifies the mega-rich and quantifies their fortunes. This issue features profiles of Europe’s richest man, Amancio Ortega, China’s richest man, Zong Qinghou, and Asia’s richest woman, Gina Rinehart. (Source: Bloomberg)
In weeks, this and hundreds of others creations inspired by pop culture or couture catwalks will fill the company’s more than 1,600 Zara stores in 85 countries on six continents. Since opening the first shop in his seaside home of La Coruna in 1975, billionaire founder Amancio Ortega has built the world’s largest clothing retailer — and a fortune exceeding Warren Buffett’s, Bloomberg Markets magazine reports in its December cover package.
Ortega’s wealth is soaring even as his country battles an economic meltdown. Spain’s unemployment is hovering around 25 percent as the country suffers its second recession since 2009 and a debt crisis roils Europe. Standard & Poor’s cut Spain’s debt rating to one level above junk on Oct. 10. With the global economy growing the slowest in three years, Ortega’s cost- conscious lines are ringing up sales.
“That turbulence strangely favors a retailer like Zara,” says Nancy Koehn, a retail historian at Harvard Business School. “Among fashionistas, there’s a new badge of status in finding the cool at a lower price.” Kate Middleton, the Duchess of Cambridge, is sometimes photographed wearing Zara.
Inditex, short for Textile Design Industries in Spanish, boosted revenue to 7.2 billion euros ($9.3 billion) in the first half of 2012, 17 percent more than a year earlier. Revenue in Spain remained stable at about 1.6 billion euros during that time.
“They are fast reacting to fashion, they are very flexible with their product and they are growing nicely,” says Peter Braendle, who helps oversee $55 billion, including Inditex shares, at Swisscanto Asset Management AG in Zurich.
Ortega’s Buffett-beating billions haven’t changed him, people who work with the fashion mogul say.
After stepping down as Inditex chairman last year, he still travels a half-hour to headquarters most days from La Coruna, where residents speak the local Galician language. He usually settles at a table amid the designers, fabric experts and buyers for the Zara Woman line.
Wearing a simple shirt and slacks rarely of his own brands, which are cut for slimmer men, he confers on everything from placement of a zipper to the September debut of Zara’s Chinese website.
“He’s extremely close to the business operation, where he meets and sees and talks to everyone,” says Antonio Camunas, a former president of the Spain-U.S. Chamber of Commerce who connects clients with politicians, bankers and the media and has advised Ortega for almost two decades. Ortega declined to grant an interview for this story.
When Camunas, now 53, started working for Ortega in the early 1990s, the retail magnate had never been interviewed or photographed for publication. At the time, so much mystery surrounded the man behind the sleek Zara stores sprouting up across Spain that people speculated that Ortega must be a frontman for a Galician drug-smuggling ring, Camunas says, calling the idea nonsense.
“They couldn’t understand how he could do it,” says Camunas, chain-smoking at the Madrid offices of his consulting firm, Global Strategies SL. Covadonga O’Shea, who in 2008 published Ortega’s only authorized biography, later translated into English as “The Man From Zara,” wrote that Ortega met with former Catalan President Jordi Pujol to dispel the rumors.
Ortega turned the top-down fashion industry on its head by responding to customers’ demands, says O’Shea, who’s now president of the University of Navarra’s ISEM Fashion Business School in Madrid and one of just three journalists who have published conversations with him. They met 22 years ago, and she still considers him a friend.