Marta Ortega Takes Inditex Helm; Market Fears a Santander 2.0

Marta Ortega inherits Inditex: Market already discounts a Santander 2.0

The departure of Pablo Isla from Inditex's presidency and the arrival of Marta Ortega have triggered various reactions. The share peine at 28.50 euros and has been the subject of debate ever since. The question looming over the market is clear: can an heiress maintain the pace of a company that generated 26 billion euros in revenue in 2019 with a profit of 3.444 billion? The precedent of Santander, with Ana Botín at the helm, looms over all comparisons.

The Shadow of Santander: From 7.5 to 2.73 Euros

The most repeated argument concerns Ana Botín. When she assumed the presidency of Santander, the share traded at 7.5 euros. Today it stands at 2.73 euros. The comparison is inevitable: if a manager with experience at JP Morgan and leading Santander UK has destroyed value in this way, what can be expected of someone without executive track record? The response from Marta Ortega's defenders is that Inditex is not a bank and that her father, Amancio Ortega, remains the main shareholder and, in practice, the real helmsman.

Record Results Do Not Prevent Stock Market Drop

Inditex presented results with record-high sales, profit, and cash flow. Nevertheless, the share fell 3.59% from the opening, down to 27.87 euros. The market does not reward numbers; it rewards certainty. And certainty, with a change in presidency without a clear succession plan, is conspicuously absent. Some argue that closing physical stores is a strategic error in fast fashion, where impulse buying in-store is the real engine of the business. Online shopping, they say, is more rational and deliberate.

The Business: 13% Margins vs. 30% for Luxury

Inditex generated 26 billion euros in 2019 to earn 3.444 million, a margin of 13%. Kering, with 15 billion in revenue, exceeds 30%. The difference is the model: luxury versus fast fashion. But Inditex has something few match: it sells clothing with Asian inspiration at much higher prices, and the business continues to grow. The brand's value is so powerful that it allows maintaining margins while expanding into all major markets for decades. Only LVMH has better margins, but it sells far fewer garments of much higher quality.

Amancio's Shadow: Who Really Commands?

Although Isla leaves the presidency, Amancio Ortega remains theoretically apart but everything passes through him, even the most insignificant matters. He commands more than it seems, and he is taken into account. That is the hope of those who believe Inditex will not collapse. The other side is the warning: when the founder of El Corte Inglés died, the company was Spain's largest; his nephew ruined it, and his nephew's adopted daughters attempt to save what they can. The same peine with Ford, Banco Español de Crédito, and Apple, which expelled Jobs in 1984 and ten years later was bankrupt, saved by Microsoft to avoid antitrust laws.

The Future Plan No One Knows

The company has presented its future plan, and the share has fallen. The details are unknown, but the market reacted poorly. Some predict the share will drop to 23 euros, or even 15 in two years. Others believe the company has advisors and will recover. The only certainty is that Inditex is no longer a founder's company, but an heiress's. And that, in the stock market world, is always a question mark.