Amancio Ortega is not only the founder of Inditex, the parent company of Zara, but also the landlord of Amazon, Apple and Facebook.
According to data from Forbes magazine, Amancio Ortega, the founder of Inditex, the parent company of Zara, ranks 6th on the latest global rich list. Perhaps many people will worry that the overall decline of the fast fashion industry will more or less affect his total wealth, but in fact, as a top rich man, Ortega still has many investment income. One of the most important ones is “real estate speculation”.
Amancio Ortega Picture source: Business Insider
21st Century Business Review quoted data compiled by Bloomberg in related reports, saying that from 2001 Inditex Group Since its listing, Ortega has begun to purposefully use dividends from its shares to cash in real estate, and has founded a real estate investment company Pontegadea for this purpose.
Data from Pontegadea shows that as of the end of 2018, the total value of Ortega’s real estate investments had reached 9.767 billion euros, or approximately 76 billion yuan.
Among his many investments, he bought the building where Facebook’s second headquarters is located, also bought the location of Amazon’s Seattle headquarters, and acquired Apple flagship stores in Barcelona, Valencia, Spain, and Paris, France. The building where it is located. In other words, if you really want to delve deeper into Ortega’s identity, he is not only the founder of Zara, but also the landlord of technology giants such as Amazon, Apple, and Facebook.
In addition, Ortega is also more willing to reap the fruits of real estate investment by earning rent. Data also from Pontegadea shows that in 2018, the company’s rental income was 362 million euros, approximately 2.81 billion yuan. And 51% of rental income comes from Europe, 46% from the United States, and 3% from Asia. This also reflects Ortega’s global layout strategy in real estate investment.
Unsurprisingly, the Inditex brand he founded himself is naturally the largest tenant of the real estate properties he bought. And he has no mercy on collecting rent from “his own people.” 21st Century Business Review specifically mentioned in the aforementioned report that his actions had caused the outside world to question whether Inditex deliberately paid rents higher than the market price to help Pontegadea obtain more profits in disguise.
However, at the same time, he will also rent out property projects to competitors including H&M. Of course, rent levels are also the same.
The boss of Zara is making a lot of money, but Zara has been a little sluggish recently. Inditex, the parent company of Zara, is undergoing a low-key transformation.
Inditex: low-key transformation, continuing to promote sustainability and digitalization
In 1975, the Spanish group Inditex Founded the Zara brand and led other “fast fashion” companies along the way. It is considered a strong brand in the entire field. It is also an industry leader that persists in taking root in the Chinese market after Forever21 declared bankruptcy and New Look closed its stores on a large scale.
ZARA Barcelona Store
Let everyone What is not promising is the news that Zara is closing stores one after another. In September last year, Zara’s first store in New York was closed. A year later, it was revealed that the Beijing Raffles City Center store and the Wangfujing Xindong’an store were also closed one after another. When we take stock of the number of stores, net sales and EBIT (earnings before interest and taxes) of Zara stores from 2014 to 2018, we can also see that from 2015 onwards, Zara’s profit growth began to slow down, and the store growth rate also declined accordingly, even Achieve reverse growth in 2018.
2014-2018 ZARA net sales, EBIT and number of stores (data from: 2014-2018 Inditex annual report)
But Some media also pointed out that for “fast fashion” companies, the impact of e-commerce, rising physical retail rents, consumer attitudes changing from fast to refined, and criticism of clothing quality are all difficult problems. Zara is closing the number of stores and reducing operations. costs to maintain profit growth.
In fact, closing stores is just one step in a series of actions by Zara. Laying out e-commerce, strengthening digitalization, launching the Zara Home sub-line, providing denim customization services for the TRF series, and emphasizing sustainable development are all ways in which Zara is trying to get rid of the inherent label before “fast fashion” and seek new breakthroughs.
In terms of e-commerce layout, the development can be inferred from Inditex as a whole. Although it has been in the market for a short time, it has achieved a breakthrough from 47 online platforms to 156 online platforms in just two years. From no online revenue in 2016, online sales increased by 27% in 2018, accounting for 12% of total revenue, and the online market accounted for 14% of the total number of stores. The speed of online layout is evident.
At the same time, in order to better realize digital transformation, Chief Operating Officer Carlos Crespo took over as CEO, responsible for technology, IT security, logistics Yue Yuen, construction and engineering, legal affairs, procurement and sustainability. In terms of sustainable development, we are vigorously laying out online networks and using radio frequency identification technology (RFID) and other technologies in offline stores to provide�Digital experience.
Inditex online and offline stores from 2014 to 2018 (Source: 2018 financial report)
In terms of sustainability, Inditex Group announced in July that by 2025, 100% of the products of all the group’s brands, including Zara, Pull & Bear, and Massimo Dutti, will be made of sustainable fabrics. Trying to break past negative reviews such as products not being environmentally friendly.
After so many attempts, Zara’s financial performance in the first half of 2019 showed sales volume higher than last year. Growth of 7% over the same period. Although there are mixed reviews on the overall performance of Inditex Group in the market, judging from the data, it can be considered that it is slowly working towards transformation. As for whether it is effective, we may have to wait until the 2019 financial report is released in December to see the outcome. </p
