Amancio Ortega, the co-founder of clothing company Inditex Inc. and fashion retail chain store Zara, is one of the world's wealthiest people. As of March 2020, Ortega had an estimated net worth of $57.5 billion. Ortega's life truly exemplifies a rags-to-riches story.
Born in 1936 in Busdongo de Arbas, Spain, Ortega was the son of a railway worker. He began working at an early age, leaving school at 14 to sew shirts by hand for a tailor. Over time, he was promoted to jobs with more responsibility, eventually managing a clothing store that catered to the wealthy.
As his knowledge of the clothing industry grew, so did his ambition. This is the story of how Ortega seized the opportunity to start his own small clothing business, growing it into one of the most successful retail operations in the world.
- Amancio Ortega is a self-made Spanish entrepreneur and billionaire, the founder of clothing merchandiser Inditex and the popular clothing chain store Zara.
- At the age of 14, Ortega left school and started his career in the garment industry as an errand boy and assistant in a tailor's shop.
- Ortega's big break came in 1963 when he formed a small family company called Confecciones Goa that manufactured bathrobes and lingerie.
- In 1985, Ortega founded Inditex as a holding company and began expanding the company's stable of leading fashion brands to include Pull&Bear, Massimo Dutti, Stradivarius, and Bershka.
- By 2010, Ortega had greatly diversified his investment holdings into high-end real estate, purchasing properties in Barcelona, Madrid, New York, London, and Chicago.
Amancio Ortega and Zara
In 1963, Amancio Ortega gathered the local women into a thousand different cooperatives and formed a company called Confecciones Goa that sold the dressing gowns, housecoats, and lingerie they produced. Ortega's siblings and soon-to-be-wife Rosalia Mera also stitched some of the first items by hand in their home. In 1975, he and Rosalia opened a retail store they called Zara that quickly expanded across Galicia, Spain. Zara attracted sales because it sold designer fashions at reasonable prices.
Inditex Dominates the Fashion World
By the mid-1980s, Ortega had spread Zara throughout Spain. In time, he incorporated the brand into a holding company named the Inditex Group and bought 59.29% of the group’s shares, thereby becoming its largest shareholder. Inditex SA (BME: ITX) serves as Europe’s leading fashion retailer and carries brands that include Massimo Dutti, Uterque, Zara Home, Stradivarius, Bershka, Oysho, and Pull&Bear.
To date, the Spain-based company has more than 88,000 employees and operates more than 7,400 stores in 96 markets around the world. In its 9-month interim report ending Oct. 2019, the company reported gross profits of 11.5 billion euros, or $12.8 billion, a year-over-year increase of 8%.
Acquisitions and Expansion
The 1990s was the decade when Ortega expanded his wealth by acquiring the Massimo Dutti, Uterque, and Stradivarius fashion designs, as well as the Pull&Bear and Bershka brands. Ortega differentiated himself from competitors by limiting advertising, controlling most of his supply chain, and expanding as wildly as he could. He also chose wisely when investing in Inditex, which Louis Vuitton, French fashion designer, called "possibly the most innovative and devastating retailer in the world." When the Spanish stock market plunged, Inditex gained, giving Ortega about $45 billion.
Ortega Diversifies His Holdings
By the end of 2010, Ortega had diversified his investments, owning premium office and retail properties in major cities in Spain, parts of Europe, and the United States. Three of his acquisitions were the Epic Residences & Hotel in Miami, Florida; the Torre Picasso skyscraper in Madrid; and a nine-story building also in Madrid, which he bought for $450 million. Ortega also acquired a 21.6% stake in La Coruna, an equestrian center in Larin, Spain. In 2016, Forbes named him the richest man in Europe and the wealthiest retailer in the world.
Amancio Ortega earns about $400 million a year in dividends, which he frequently invests in real estate in cities like Barcelona, New York, Miami, and London.
The Bottom Line
Frugality, focus, and hard work are three of the reasons for Amancio Ortega's success. Ortega lives a humble life. He avoids publicity, is a workaholic, and went without holidays for 25 years. He eats his meals in the company cafeteria along with his employees and visits the same corner cafeteria every day. In fact, Ortega has yet to own an office; he works from various design areas and factories instead. Ortega's first interview was in 2000 when he promoted Zara. Even then, the interview was given to only three journalists. The billionaire’s only published photograph until 1999 was an old national ID.
Ortega can also attribute his wealth to his shrewd investing strategy. Most of his fortune has come from Inditex, the world's largest clothing retailer from which the billionaire has received more than 4 billion euros in dividends. The once-upon-a-time errand boy is consistently listed in Forbes' top 10 wealthiest individuals in the world, joining the ranks of billionaires Jeff Bezos, Bill Gates, and Warren Buffett.