Press dossier Press dossier the Group Inditex, one of the world’s largest fashion distributors, has more than 4,780 stores in 77 countries in Europe, the Americas, Asia and Africa. In addition to Zara, the largest of its retail chains, Inditex has other commercial formats: Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterque. The Group also includes more than a hundred companies associated with the different activities in the business of textile and fashion design, manufacture and distribution.
Its unique management model, based on innovation and flexibility, and its vision of fashion (creativity and quality design, together with a rapid response to market demands) has resulted in fast international expansion and an excellent performance of its commercial formats. The first Zara store opened to the public in 1975 in A Coruna (North-Western Spain), the place where the Group started business and where it has its central offices. Today, Inditex Group stores can be found in all the world’s major cities, always in the main shopping districts.
ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 5 The business model Inditex has been listed on the Spanish Stock Exchange since 23 May 2001, after an IPO that aroused a great deal of interest among investors worldwide, with its shares being oversubscribed some 26 times over. Its shares are quoted on the main Spanish and international share indexes. Fiscal year 2009 2008 09/08 Turnover* Net Profit* Number of stores Number of countries International sales Employees 1,084 1,314 4,607 74 68% 92,301 10,407 1,253 4,264 73 66% 89,112 7% 5% 343 1 3,189 The key to this model is the ability to adapt the offer to customer desires in the shortest time possible. For Inditex, time is the main factor to be considered, above and beyond production costs. Vertical integration enables us to shorten turnaround times and achieve greater flexibility, reducing stock to a minimum and diminishing fashion risk to the greatest possible extent. SALES
The Inditex financial year is from 1st February to 31 January of the following year * in millions of euros 6 INDITEx MA N OYSHO ZARA HOME The key element in the organisation is the store, a carefully designed space conceived to make customers comfortable as they discover fashion concepts. It is also where we obtain the information required to adapt the offer to meet customer demands. UFAC TURE 7 ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS
D IS T RIB U TI O N D E SIG N Inditex has grown dramatically in recent years, achieving a consolidated turnover in 2009 of 11,084 million euros, with a net profit of 1,314 million euros. On 31st January 2009 the Group had 92,301 employees. The following table shows the Group’s most significant figures in 2009 and 2008: The Inditex business model is characterised by a high degree of vertical integration compared to other models developed by our international competitors.
It covers all phases of the fashion process: design, manufacture, logistics and distribution to its own managed stores. It has a flexible structure and a strong customer focus in all its business areas. The business model Design Logistics Location of the distribution centres Arteixo (A Coruna) Naron (A Coruna) Leon Madrid Onzonilla (Leon) Meco (Madrid) Tordera (Barcelona) Palafolls (Barcelona) Sallent de Llobregat (Barcelona) Zaragoza Elche Zaragoza Elche Stradivarius Zara All concepts (shoes) 75. 000 m2 175. 000 m2 45. 00 m2 Zara Pull and Bear Zara Massimo Dutti/Oysho Bershka 40. 000 m2 175. 000 m2 65. 000 m2 Zara/Zara Home/Uterque 160. 000 m2 280. 000 m2 m 0 5 0 2 . Main format served Surface The success of Inditex’s collections lies in the ability to recognise and assimilate the continuous changes in fashion, constantly designing new models that respond to customer desires. Inditex uses its flexible business model to adapt to changes occurring during a season, reacting to them by bringing new products to the stores in the shortest possible time.
The models for each season -over 30,000 last year- are developed in their entirety by the creative teams of the different chains. Over 300 designers -200 for Zara alone- take their main inspiration from both the prevailing trends in the fashion market and the customers themselves, through information received from the stores. platform Galicia Logistics All production, regardless of its origin, is received at the logistical centres for each chain, from where it is distributed simultaneously to all the stores worldwide on a highly frequent and constant basis.
The distribution takes place twice a week and each delivery always includes new models, so that the stores are constantly refreshing their offer. The logistics system, based on software designed by the company’s own teams, means that the time between receiving an order at the distribution centre to the delivery of the goods in the store is on average 24 hours for European stores and a maximum of 48 hours for American or Asian stores. Manufacture A significant proportion of production takes place in the Group’s own factories, which mainly manufacture the most fashionable garments.
The Group takes direct control of fabric supply, marking and cutting and the final finishing of garments, while subcontracting the garmentmaking stage to specialist firms located predominantly in the North-West of the Iberian peninsula. The Group’s external suppliers, a high percentage of which are European, generally receive the fabric and other elements necessary for making the clothing from Inditex. Cataluna Sallent (Barcelona) Tordera (Barcelona) Zaragoza Palafolls (Barcelona) LOGISTICS CENTRES 8 ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI
BERSHKA STRADIVARIUS OYSHO ZARA HOME 9 The business model Corporate Social Responsability Distribution in the company’s own stores The point of sale is not the end of the process but rather its restart, as the stores act as market information gathering terminals, providing feedback to the design teams and reporting the trends demanded by customers. Both the interior and exterior of the store design are given the highest priority. Here, the shop windows play a major role, acting as authentic advertising for our chains in the world’s main shopping streets.
As for the interior design, the aim is to create a well-lit space where the clothes take pride of place, eliminating all barriers between the garments and the customers. The main development strategy for the Inditex sales formats is the opening of stores managed by companies in which Inditex is the sole or majority shareholder. In smaller or culturally different markets, the Group has extended the store network through franchise agreements with leading local retail companies. At the end of the FY2009, there were 624 franchised stores out of a total of 4,607 stores.
The main characteristic of the Inditex franchisement model is the total integration of franchised stores with own managed stores in terms of product, human resources, training, windowdressing, interior design, logistical optimisation and so on. This ensures uniformity in store management criteria and a global image in the eyes of customer around the world. Inditex views social and environmental variables as a strategic factor of its management system. Sustainable growth, a demand from our customers and society in general, is a value that is shared internally and that the company applies to its suppliers.
This sustainability strategy is coordinated in the social field through the Internal Code of Conduct and the Code of Conduct for External Manufacturers and Suppliers, and in the environmental field it is defined in the Environmental Strategic Plan. All of Inditex’s actions in the field of corporate responsibility are audited by external agents in order to provide greater objectivity. Transparency is Inditex’s fundamental management value and enables a sincere, open relationship to be established with all groups that hold a stake in our business. The efforts of Inditex in this field have been recognised internationally.
All of Inditex’s activities are carried out ethically and responsibly, including actions in different areas such as health and safety of our products, control of the supply chain and the connection between out actions and the social environment. All of Inditex’s products respect the environment and health and safety. By implementing the strictest international standards, Inditex can guarantee its customers that its products meet optimal health, safety and ethical conditions. Inditex believes that an ethical and stable relationship with its network of external suppliers world-wide is essential.
Therefore, the company applies its social commitment to all of these suppliers through the Code of Conduct for External Manufacturers and Suppliers. Acceptance of this is obligatory to be able to maintain business relations with Inditex. To ensure that this code is fulfilled, independent external companies audit suppliers regularly. Inditex follows this up with improvement programs for suppliers and social programs aimed at promoting education and a better quality of life in the regions in which it does business. The environmental aspect has always played an important role in Inditex’s activities.
This policy has been implemented in recent years through an environmental management system that Inditex has designed and adapted to the requirements of its business model. This regularly evaluates the potential impact that the company’s activities have on biodiversity and the natural environment. Apart from fostering fulfilment of environmental legislation, the system increases efficiency in terms of the consumption of resources and reduces the environmental impact This is the basis of the 2007-2010 Environmental Strategic Plan that Inditex has implemented in order to introduce the concept of sustainability in all of its activities. 0 INDITEx ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 11 Commercial formats In order to segment its approach to the market, Inditex has different fashion distribution chains, all of which share the same commercial and managerial focus: to be leaders in their segment through a flexible business model and an international scope. However, each of the chains has a great deal of autonomy in managing its business; their management teams are independent in commercial decision-making and in the way they administer their resources.
Nonetheless, the fact they belong to a group spread over 77 countries provides a great number of organisational and knowledge-management synergies. Thus, each management team can concentrate on developing its business in the knowledge that certain support elements are covered by the Group’s accumulated experience. Inditex, as the parent company, is responsible for the central corporate services, i. e. those services shared by the eight chains and which facilitate international growth: administration, the use of logistics technology, the general HR policy, legal issues, and financial capacity, among others.
ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 13 Zara (www. zara. com), whose first store opened in 1975 in A Coruna (Spain), is present in 77 countries, with a network of more than 1,600 stores, ideally located in major cities. Its international presence clearly shows that national frontiers are no impediment to sharing a single fashion culture. With a creative team of more than 200 professionals, Zara’s design process is closely linked to the public. Information travels from the stores to the design teams, transmitting the demands and concerns of the customers.
The vertical integration of activities (design, production, logistics, and sales in the company’s own stores) means Zara is flexible and fast in adapting to the market. Its model is characterised by continuous product renovation: new articles reach the stores twice a week. Zara pays special attention to the design of its stores, its shop windows and interior decor, and locates them in the best sites of major shopping districts. Its central services are located in Arteixo (A Coruna). ZARA 2009 Number of stores 1,608 7,077 77 Turnover* % international sales (*) in millions of euros ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI
BERSHKA STRADIVARIUS OYSHO ZARA HOME 15 Pull and Bear (www. pullandbear. com) was set up by the Inditex Group in 1991. Since its creation, its fashion concept has known how to adapt to the needs of young people, and is now a clear point of reference for casual, laid-back clothing. Pull and Bear aims to be something more than just a point of sale. As well as the clothes and accessories, the chain offers special spaces in the stores in which the display fixtures are combined with recycled elements from the past, to create the kind of surroundings that young people love. Pull and Bear has more than 650 stores in 45 countries.
Its central services are located in Naron (A Coruna). PULL AND BEAR 2009 Number of storesi 626 771 54 Turnover* % international sales (*) in millions of euros ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 17 Massimo Dutti (www. massimodutti. com) was founded in 1985 and acquired by Inditex in 1991. Today, it has more than 500 stores in 46 countries. Massimo Dutti offers quality international fashion design for men, women and children, with a variety of collections that range from sophisticated urban fashions to casual wear. Its central services are located in Tordera (Barcelona).
MASSIMO DUTTI 2009 Number of stores 497 790 56 Turnover % international sales (*)in millions of euros ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 19 Bershka (www. bershka. com) was founded in 1998 as a new store and fashion concept, targeting the young female market. Since 2002 it has also sold men’s fashion. Bershka stores are large and spacious with a cutting-edge look. They are designed as meeting points for fashion, music and street art. The chain has more than 650 stores in 48 countries. Its central services are located in Tordera (Barcelona). BERSHKA 2009 Number of stores 51 1,177 58 Turnover % international sales (*)in millions of euros ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 21 Stradivarius (www. e-stradivarius. com), a chain acquired by Inditex in 1999, brings the latest trends in design, fabrics and accessories to a young female public. Its spacious stores (over 550 in 41countries) have a modern, dynamic design and offer a wide range of fashion possibilities, with a casual and imaginative style. Its central services are located in Sallent de Llobregat (Barcelona). STRADIVARIUS 2009 Number of stores 515 702 38 Turnover % international sales *)in millions of euros ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 23 Oysho (www. oysho. com) started business in 2001. This format brings the philosophy of the Inditex Group to the women’s lingerie and underwear sector, offering the latest trends with quality products at reasonable prices. It has more than 400 stores in 24 countries. Its central services are located in Tordera (Barcelona). OYSHO 2009 Number of stores 392 280 54 Turnover % international sales (*)in millions of euros ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 5 Zara Home (www. zarahome. com) is the seventh chain of the Inditex Group. It specialises in home furnishings, focussing on textiles, such as bed, table and bathroom linen, complemented by tableware, cutlery, glassware and decorative items. Zara Home offers design, quality and innovation at competitive prices. It has more than 260 stores in 26 countries. Its central services are located in Arteixo (A Coruna). ZARA HOME 2009 Number of stores 261 243 57 Turnover * % international sales (*)in millions of euros ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 27 Uterque (www. uterque. s) is the latest chain to be created by the Inditex Group. The business proposal of Uterque focuses on accessories –handbags, footwear and leather goods, costume jewellery and other accessories such as shawls, eyewear, umbrellas or hats, together with a selected range of garments and leather clothing. Nowadays, Uterque has more than 65 stores in 15 countries. The stores have an elegant look and spaces have been designed so that they appear functional but providing at the same time the maximum comfort for its customers. UTERQUE 2009 Number of stores 57 44 24 Turnover * % international sales (*)in millions of euros ZARA KIDDY?
S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 29 Emblematic stores, the hallmark of the Group The stores are the meeting point with our customers and the best advertising campaign of the Inditex Group. Launched in major cities worldwide, thy offer our fashion proposal to the high street and represent the true hallmark of the brand, always with an original and unique touch. Inditex applies the principles of its business philosophy to the architecture of the stores: design, permanent innovation, quick answer and adjusting locally to the prospects of our customers and the requirements of the environment.
Creation of stores is seen as a constant and open process, which is key for our business and is the result of the professional collaboration between various departments. Although sharing the same set of principles, each store is unique and adjusts to different cultures and environments. Our architectural projects sometimes involve historic heritage renovation, with detailed renovation projects of singular spaces. Shanghai, Nanjing Road 30 INDITEx ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 31 New York , 5th Avenue 32 INDITEx
ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS Salamanca, Spain OYSHO ZARA HOME 33 Tokyo, Ginza Milano, Corso Vittorio Emmanuele 34 INDITEx ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 35 The international expansion 1975 1988 1989 1990 1992 1993 1994 1995 1996 1997 Spain Portugal United States France Mexico Greece Belgium and Sweden Malta Cyprus Norway and Israel 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Argentina, United Kingdom, Venezuela, Turkey, Lebanon, U. A.
E, Kuwait and Japan The Netherlands, Germany, Poland, Saudi Arabia, Bahrain, Canada, Brazil, Chile and Uruguay Andorra, Qatar, Austria and Denmark Puerto Rico, Jordan, Ireland, Iceland, Luxembourg, Czech Republic and Italy El Salvador, Finland, Dominican Republic, Singapore and Switzerland Russia, Malaysia, Slovenia and Slovakia China, Morocco, Estonia, Latvia, Lithuania, Hungary, Romania and Panama Philippines, Thailand, Monaco, Costa Rica and Indonesia Serbia and Tunisia Guatemala, Croatia, Colombia and Oman Korea, Ukraine, Egypt, Honduras and Montenegro Syria Bulgaria, Kazakhstan, India
The first Zara store opened to the public in A Coruna (North-Western Spain) in 1975. Over the following decade it continued to open new stores throughout Spain. In 1988 it debuted in Porto (Portugal), and in the next few years, the first stores were opened outside the Iberian Peninsula, in New York (1989) and Paris (1990). This was the beginning of a process leading up to the current presence in 77 countries in Europe, the Americas, Asia and Africa.
It sucess among people, cultures and generations which, despite their differences, all share a special feeling for fashion lies in the conviction that national frontiers are no impediment to sharing a single fashion culture. 36 INDITEx ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 37 The international expansion Sales by geographical areas / 2009 The usual way of entering a new market is to start with a small nember of stores, which can explore the possibilities of a specific country in order to gain a critical mass of customers.
The new formats incorporated into the Group since 1991 share the same international approach as Zara -in fact, that is one of their fundamental characteristics. As a result, all of them have grown simultaneously in Spain and in other countries. In most cases, Zara has been the first chain to break into new countries, accumulating experience which has helped the later implementation of the rest of the concepts. This accumulated experience has also allowed the accelerated international expansion of the more recently created chains. 1. 8% 45. 7% Europe ex Spain Spain Asia 10. 2% The Americas 12. 2% 38 INDITEx ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 39 Amancio Ortega Gaona, chairman and founder of Inditex, was born in 1936 in Busdongo de Arbas, Leon. He moved to A Coruna with his family at an early age, and it was there that he began his business activities in the textile sector. After working with two well-known establishments in A Coruna, he ventured out with a business project of his own.
His first steps culminated in the creation, in 1963, of the company Confecciones GOA, a garment manufacturing company. Following an initial stage of growth in the area of production, the first store of the Zara chain opened on a central A Coruna street in 1975. In 1985, Amancio Ortega integrated Zara in a new holding company, Industria de Diseno Textil, INDITEx S. A. In 2001 the Amancio Ortega Foundation was set up, a private non-profit organisation aimed at promoting all types of activities in the fields of culture, education, research and science.
Pablo Isla, First Deputy Chairman and CEO of Inditex, was born in Madrid in 1964. He is a graduate of Law from the Complutense University of Madrid and State lawyer. He was Chairman of the Board of Directors of Altadis and co-CEO was jointpresident of this group from July 2000. From 1992 to 1996 he was Director of Legal Services for Banco Popular. He went on to be appointed General Director of State Assets at the Ministry of Economy and Finances. In 1998, he rejoined Banco Popular as General Counsel, until he was appointed in the Altadis group. 40 INDITEx
ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 41 Inditex landmarks 1963 Amancio Ortega Gaona, chairman and founder of Inditex, begins his business activities as a clothing manufacturer. The business grows steadily over the next decade until it has several production centres, distributing their products to different European countries. Zara is founded with the opening of its first store in a central street in A Coruna (Spain).. The acquisition of Stradivarius makes it the fifth concept of the Group.
Inditex moves its headquarters into a new building in Arteixo (A Coruna, Spain). Launching of the Oysho lingerie concept. On 23 May 2001 Inditex goes public and is listed on the stock market. The opening of the first Zara Home stores, the seventh concept in the Group. Inditex inaugurates its second Zara distribution centre, Plataforma Europa, in Zaragoza (Spain), complementing the activity of the Arteixo logistical centre (A Coruna, Spain). The Inditex Group opens store number 2,000 in Hong Kong, thereby reaching a presence in 50 countries in Europe, The Americas, Asia and Africa.
Inditex opens store number 3,000 in Valencia (Spain), a Zara Home store located in one of the most important commercial streets of the city. The Group adds two news logistic platforms located in Leon and Meco (Madrid), both in Spain. Inditex has eight logistic platforms in Spain. Launching of the Uterque fashion accesories concept, the eight chain of the company. Inditex opens the store number 4,000 in Tokyo. 2009 The Zara fashion concept is well received by the public, allowing it to expand its network of stores to the main Spanish cities. Creation of Inditex as the head of the corporate Group.
The manufacturing companies in the Group direct their total production to the Zara concept and establish the basis for a logistics system to match the expected high growth rates. The opening of the first Zara store outside Spain occurs in December 1988 in Porto (Portugal). The Group expands to the United States and France with the opening of outlets in New York (1989) and Paris (1990). Launching of Pull and Bear and the Group acquires the 65% of Massimo Dutti Group. Inditex acquires the whole of the share capital of Massimo Dutti. The Bershka concept, targeting the younger female market, begins activity.
Inditex signs a joint venture with the Tata Group to open stores in India beginning in 2010. Stradivarius, Bershka and Pull and Bear open its first stores in China. A new distribution centre begins operating in Palafolls (Barcelona), next to the existing logistics platform in Tordera. For further information. Communication and Institutional Relations Corporate Division INDITEX [email protected] com +34 981 185 400 42 INDITEx ZARA KIDDY? S CLASS/SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOME 43 www. inditex. com