Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
I was not aware of who the third most wealthy person was after Bill Gates and Carlos Slim. Fortune has an extensive piece on the man – his name is Amancio Ortega, a Spanaird. Thought it might be a Russian oligarch of some sort so I was a bit surprised. It is actually quite an interesting story of how he built himself up if you are interested in these sort of things.
Amancio Ortega Gaona — the man inside the car — is the third-richest man on earth. In this provincial corner of Galicia, on Spain’s windswept northwestern coastline, the 76-year-old founder of the Inditex Group has spent years secluded from public view, all while living in the middle of La Coruña, a city of 246,000 people. Among the millions of shoppers who patronize Inditex’s flagship brand, Zara, and have made Ortega unfathomably rich, few have even heard his name. Ortega has made sure of that, shunning social appearances and refusing all interview requests (including for this article). Until 1999 no photograph of Ortega had ever been published.
And yet, a world away from the glitz of Paris, Milan, and New York, Ortega has built a fashion empire that reaches into more than 80 countries. Beginning 40 years ago, Ortega ripped up the business model that had been refined over decades by Europe’s fashion houses and replaced it with one of the most brutally fast turnaround schedules the industry had ever attempted. Decades later Zara is the world’s biggest fashion retailer.
Ortega built his empire on two basic rules: Give customers what they want, and get it to them faster than anyone else. The twin organizing principles have made the company (and Ortega) into an unlikely iconoclast, more of an optimal supply chain than a traditional retailer. They are also the secret to Inditex’s astonishing success. In December, CEO Pablo Isla announced that revenue was up 17% year on year for the first three quarters of 2012 — that nine-month sales revenue amounts to $14.6 billion — and net profits matched 2010’s, at $2.71 billion. So far, the growth shows no signs of slowing.
Inditex produced 835,000 garments in 2011. A new Zara store opens every day, on average; Inditex’s 6,000th store just launched on London’s Oxford Street. There are 46 Zara stores in the U.S., 347 in China, and 1,938 in Spain. Ortega controls more than 59% of the company’s shares, and last July he overtook Warren Buffett to become the world’s third-richest man, behind Carlos Slim Helú and Bill Gates. The reclusive, enigmatic Spaniard, hunting for ideas from his car window on the streets of his hometown, is now worth about $56 billion.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
