The Reclusive Spanish Billionaire Behind Zara's Fast Fashion Empire

He's the richest man you've never heard of: Amancio Ortega, founder of the Spanish clothing chain Zara. He's a notorious recluse who is rumored to wear the same plain shirt every day, but his Zara empire has come to define the concept of fast fashion.

And now he's taken Warren Buffett's No. 3 spot on Forbes' billionaires list.

Ortega's rags-to-riches tale mirrors the fast growth of southern Europe in the past 30 years. But the difference in this story is that Zara shows no sign of crashing.

His Beginnings

Ortega built the world's biggest fashion company in a rainy, impoverished corner of northwest Spain — Galicia — where the 76-year-old has lived since he was a kid.

The son of a railway worker, Ortega went to work in a local shirt maker's shop at age 14 to help feed his family. Jose Martinez was Ortega's first colleague. He's 77 now and still works at that same shop called Gala.


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In Trendy World Of Fast Fashion, Styles Aren't Made To Last
"He may be the third-richest man in the world, but for me, he's just a good guy," Martinez says. "He came to work in my father's shop in 1951, so we became friends, Amancio and me."

More than 60 years later, Gala employees still sew shirts upstairs from where they're sold. That's a model Ortega took with him when he opened his first Zara store two blocks from Gala in 1975.

As the company grew, he kept production close to home — in Spain and Portugal — at a time when other chains were moving factories to Asia for cheap labor.

A Look Inside Ortega's Empire

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The New York City Zara store on Fifth Avenue.

Evan Joseph Uhlfelder/Courtesy of Inditex
Sooty smokestacks dot the green Galician hills around Zara's headquarters. Inside, machines sort garments to dispatch to stores.

Every single garment passes through Spain. And more than half of production is done locally. That allows Zara to be quick: 15 days from design to retail rack — compared with the old industry standard of six months.

"They look at whatever is new," fashion expert Jose Luis Nueno says. "They see what the celebrities and so on are wearing, and put it in their windows very fast."

Nueno studied the clothing company at Harvard Business School and now teaches at Spain's IESE Business School. He says the key to fast fashion — and to Zara's success — is owning the whole supply chain from factory to retail and dealing in small batches that sell quickly.

"If I change the merchandise very frequently, then I give you an excuse to come to the store more frequently," Nueno says.

He has asked his students how many times they frequent the clothing store, and he says the responses have been "absolutely pathological." Sometimes they shop there once or twice a week, he says.

And Zara entices shoppers just like that, with zero advertising. Instead it has invested in flagship stores in historic buildings — a converted convent, an art deco cinema — and a $324 million store on New York's Fifth Avenue. This year, it will open 500 new stores.

The Secret Formula

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Amancio Ortega went to work at Gala, a men's clothing store, when he was 14. Gala opened in 1931 in La Coruna, Spain, and is still operating today.

Lauren Frayer/NPR
Like Ortega, his company, Inditex, which manages Zara and seven other brands, is notoriously secretive. It took nearly two months to get clearance to visit its office, and Ortega declined our request for an interview.

"Well, our philosophy is that the customer is the one to describe if we do good or bad things," says Jesus Echevarria, Inditex's spokesman. "It is not ourselves, to explain how good or how bad we are."

At Zara's flagship store in Madrid, customers are doing just that.

"I like it because it's not so expensive," a shopper says.

Another customer says she likes the quality of the clothes, but the only problem is the lack of bigger sizes.

Yet Zara is famous for adapting. Sales clerks report back to headquarters daily on what customers are saying.

For example, if they're asking for a particular blue jacket in green, that green jacket might just land on a rack. If enough shoppers request that green color, "I'm positive that [jacket] would turn into green," Echevarria says.

Back in Ortega's hometown, the shirt maker, Jose Martinez, says he has no regrets about staying put and not joining his friend at Zara when the company took off.

"It never appealed to me, to leave and start a bigger business. This is my shop, and everything I love is right here. I've made it!" Martinez says.

He says Ortega drops by with a bottle of wine each Christmas. Ortega is now worth more than $56 billion. And Inditex has about 6,000 stores in 85 countries — and counting. Another one is likely to open today.

Coach Announces Further Strengthening of Creative Team

Coach, Inc., a leading marketer of modern classic American accessories, today announced a further strengthening of its creative organization with two key appointments focused on elevating store environments globally.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc., said, “The appointments of Zach Augustine and Erin Thompson to these newly created roles are the latest steps we’ve taken to broaden our capabilities to enhance the Coach experience through product, retail environments and integrated marketing communications. This comprehensive approach to our transformation to a lifestyle brand will add excitement and cachet to Coach.”

Zach Augustine will join Coach as EVP, Global Environments, effective March 11, 2013, reporting to Reed Krakoff. Mr. Augustine will lead initiatives across Visual Merchandising, Architecture and Creative Development partnering with the other leaders to create a consistent and cohesive brand story.

Mr. Augustine joins Coach from Nike, where he held the role of Global Creative Director – Direct-to-Consumer Experience. Prior to Nike, he was co-founder of Winston, a consulting firm that worked with clients on projects ranging from brand identity design to retail and showroom design, development and production. He started his career in visual merchandising at Giorgio Armani and worked in creative leadership positions of increasing responsibility at Diesel, Polo Jeans, Nautica and Levi Strauss before launching Winston.

Additionally, Erin Thompson will join Coach this spring as VP, Artistic Director, Global Environments. In this role, Ms. Thompson will oversee all creative development for windows, in-store, showrooms and events, reporting to Mr. Augustine. Ms. Thompson comes to Coach from Selfridges & Co., in London, where she most recently held the position of Head of Visual, having initially joined the company in 2002. Prior to Selfridges, Ms. Thompson spent twelve years at Mulberry in progressively senior visual merchandising roles.

Reed Krakoff, President and Executive Creative Director, added, “Our stores are our most important point of engagement with our customers - they allow us to showcase the world of Coach in its fullest expression. Both Zach and Erin have extensive and successful track records of creating impactful consumer experiences that will be instrumental in bringing our stores to the next level.”

The company appointed Sandra Hill, EVP Women’s Design who joined Coach in January 2013 with responsibility over all women’s product. Ms. Hill was credited with building out the Women’s business at Paul Smith Ltd., in London where she held increasingly more senior creative positions leading to her elevation to Creative/Design Director Womenswear in 2007, departing in 2011. During her 16 year tenure, she partnered with Paul and was responsible for leading the vision for Women’s across all categories including ready-to-wear and accessories.

Coach had previously appointed Jeffrey Uhl to his current position as SVP Men’s Design in September 2012. He originally joined Coach in July 2010 from Converse. Since joining Coach in 2010, Jeffrey has been instrumental in the transformation and tremendous growth of the Men’s business across all channels and geographies.

Coach, with headquarters in New York, is a leading American marketer of fine accessories and gifts for women and men, including handbags, men’s bags, women’s and men’s small leathergoods, weekend and travel accessories, footwear, watches, outerwear, scarves, sunwear, fragrance, jewelry and related accessories. Coach is sold worldwide through Coach stores, select department stores and specialty stores, and through Coach’s website at www.coach.com. Coach’s common stock is traded on the New York Stock Exchange under the symbol COH and Coach’s Hong Kong Depositary Receipts are traded on The Stock Exchange of Hong Kong Limited under the symbol 6388.

Neither the Hong Kong Depositary Receipts nor the Hong Kong Depositary Shares evidenced thereby have been or will be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to, or for the account of, a U.S. Person (within the meaning of Regulation S under the Securities Act), absent registration or an applicable exemption from the registration requirements. Hedging transactions involving these securities may not be conducted unless in compliance with the Securities Act.

This press release contains forward-looking statements based on management's current expectations. These statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "intend," “ahead,” "estimate," "on track," “on course,” "are positioned to," "continue," "project," "guidance," “target,” "forecast," "anticipated," or comparable terms. Future results may differ materially from management's current expectations, based upon risks and uncertainties such as expected economic trends, the ability to anticipate consumer preferences, the ability to control costs, etc. Please refer to Coach’s latest Annual Report on Form 10-K for a complete list of risk factors.

Agent describes grisly cannibal talk at NY trial

The trial of a New York police officer accused of conspiring to kill and eat women featured grisly testimony Tuesday as an FBI agent described the Internet correspondence between the officer and a man in Great Britain who spoke as if he were mentoring the officer on the art of cannibalism.

Agent Corey Walsh read passage after passage from emails and text messages between Officer Gilberto Valle and a man the government said used Moody Blues as a screen name and MeatMarketMan as an email address.

"I'm dying to taste some girl meat," the agent said Valle wrote.
Some of the passages went into sickening descriptions about cooking and eating women. Others sounded so absurd they bordered on cartoonish, feeding the defense argument that Valle and friends he met on extreme sexual fetish websites were merely engaging in fantasies.

In describing one potential victim, Moody Blues suggested "cutting off her feet and barbecuing them in front of her" while she was still alive.
Throughout, jurors remained stone-faced as they followed the words on screens before them while Walsh read them aloud in a federal courthouse in Manhattan, where the charges of conspiracy to kidnap and improper use of a federal database system could bring Valle, 28, a life sentence if he's convicted.
The government called several women who were the subjects of some of the Internet correspondence to testify how they knew Valle just before Walsh took the witness stand.

Kimberly Sauer, of Germantown, Md., went to the University of Maryland with Valle and had nothing bad to say about her former classmate. Like the other women, including one who had never met him, she knew nothing about the Internet desires of Valle and the others. On cross-examination, Sauer told defense attorney Julia Gatto that she never felt threatened by Valle.

Sauer learned of the case only after she received from Valle's wife last year in the middle of the night a disturbing Facebook message that sounded so crazy that she texted him to warn that the account must have been hacked. Either that "or you're trying to sell me into white slavery," she recalled joking in the text.

Walsh said Sauer was a central subject for Valle and Moody Blues, who claimed he had fantasized about cannibalism since he was 6 years old but did not fulfill the desire until 35 years later.

In one correspondence, Valle suggests a woman named Kimberly — prosecutors say Sauer — would be easy prey because she lived alone.

"I can knock her out, wait until dark and kidnap her right out of her house," he wrote, according to prosecutors.

The agent said Moody Blues suggested eating their victim alive but Valle responded: "I'm not really into raw meat."

Walsh said they also discussed cooking Sauer, basted in olive oil, over an open fire and using her severed head as a centerpiece for a sit-down meal.
"I just can't wait to get Kimberly cooking," the agent quoted Valle as saying.
The agent said Valle's computer had a file titled "Abducting and Cooking Kimberly: A Blueprint," which included a photo of Sauer.

Walsh testified that the federal probe began after Valle's wife, Kathleen Mangan-Valle, in September gave the FBI in Reno, Nev., a computer Valle had used.

Walsh described communications between Valle and his co-defendant, Michael Vanhise, of Trenton, N.J. He said the two negotiated the price to be paid for a Manhattan teacher to be taken to New Jersey in a suitcase for Vanhise to rape and kill.

The agent said Valle asked Vanhise whether he wanted the woman clothed or naked and Vanhise said he wanted her clothed.

"Excellent. I'll leave her clothes on. I'll give you the pleasure of unwrapping your gift," Valle was quoted as saying.

Vanhise, like Valle, has pleaded not guilty. His lawyers also say he engaged only in Internet fantasy chats.

The government hasn't said what role Moody Blues, who has been portrayed as a co-conspirator, played in the investigation.

Charming Charlie fashion accessories store opening at Twenty Ninth Street

Charming Charlie Inc., a retailer of women's fashion accessories, plans to open a store at Boulder's Twenty Ninth Street mall, according to building permits recently approved by the city of Boulder.

Charming Charlie leased a 5,900-square-foot space formerly occupied by Ai Sushi and Steak at the southwest corner of Canyon Boulevard and 29th Street. Twenty Ninth Street officials said they purposefully sought a retailer to replace the former restaurant space in the eatery-heavy south neighborhood of the center.

A retailer would pair well with anchor Nordstrom Rack, said J.T. Fulton, Twenty Ninth Street's property manager. "We kind of wanted to bridge the gap," Fulton said. "It made sense to bring some more retailers over there."
The Houston-based Charming Charlie has six locations in Colorado, including a store at The Orchard Town Center in Westminster.

Charming Charlie fills one of the larger vacancies at Twenty Ninth Street. Mall officials have indicated they are in negotiations to fill the two largest openings -- the 7,000-square-foot space vacated last year when MontBell departed to Pearl Street and the 5,500-square-foot former home to Islands Restaurant.

The former Applebee's restaurant at the corner of Walnut and 28th streets will be razed this year and replaced by a Trader Joe's grocery store.

Billionaire Green Plans 10 Topshop Stores in US

British fashion mogul Sir Philip Green plans to open 10 more Topshop stores in the U.S. within 2.5 years, after launching its first Californian branch in Los Angeles last week.

"The Los Angeles reaction was much stronger than we thought. We were about 50 percent above our target," Green told CNBC on Sunday, speaking from London Fashion Week.

Topshop, which is part of Green's fashion conglomerate Arcadia Group, also has branches in New York, Chicago and Las Vegas, as well as a partnership with upscale fashion department store Nordstrom (JWN).

Despite weak retail numbers for January from the Commerce Department, Green said "shopping has not ended."
"I think what has happened is the market is getting squeezed where the operators do not have the right merchandize or are not a necessity. Hopefully we have got something slightly different, slightly unique."
Green added that speed-to-market is "more important than ever" for fashion retailers.

"Our speed-to-market has always been very powerful and it continues to be that way. I think that is probably our edge, being able to produce very quickly."

Green refused to comment on reports he has bid for up-for-sale Dreams, whose beds he hopes to sell in his BHS department stores.

"Historically, private equity has bought retail businesses and done a reasonably good job with them. Now you read in the papers that mergers and acquisitions (M&A) is back in fashion. We will see," he said.

In December, Green sold a 25 percent stake in Topshop and Topman to LA-based private equity firm Leonard Green, in a deal that valued the high street chain at two billion pounds.

"Fast fashion continues to gain market share, particularly in Europe, and it looks like the U.S. better be prepared to compete with the new entrant," said Stacey Widlitz, the president of SW Retail Advisors, after the sale.

Stocks in major U.S. retailers fell on Friday after Wal-Mart (WMT) leaked an email in which an executive called its February sales a "total disaster". Macy's (NYSE:M), Home Depot (HD) and Target (TGT) traded lower on the news.

AP Photos: NY Fashion Week's beautiful blur

Fashion Week is a beautiful, strange and infinitely colorful event. For eight days twice a year in New York City, the fashion conscious delve into a glamorous world of wearable art.

Using multiple off-camera flashes and long exposures, I created photographs that convey movement on a single frame. One shot and one chance to capture the ebb and flow of Fashion Week's diverse cast of characters.

The concept reflects my perception of the event as organized chaos. Bustling crowds, dramatic lighting and a hectic schedule create a visual storm. Many people have seen video clips of a runway show, but far fewer have been there and felt the booming music and the reaction of the crowds.

My black T-shirt and jeans style may be simple but I've always been aware of the energy on those runways. Big things happen there, and I sought to capture that in motion.

Fashion Bug closes its final stores

After 70 years on the retail landscape, Fashion Bug is out of business.

The moderately-priced women’s specialty clothing chain shut the doors on its final store last week, leaving voids at several Indianapolis-area retail centers.

Those include at least four locations in Indianapolis — on East Thompson Road, West 86th Street, Kentucky Avenue and U.S. 31 — as well as sites in Plainfield, Greenfield, Noblesville and Anderson.

“Who cares?” said Britt Beemer, founder of America’s Research Group, which studies retail trends. “They were a non-player in retail.”

Beemer blames the retailer’s struggles on weak store locations. Many were in B-level strip centers.

“In this competitive environment you are either in the right store location or you’re dead,” he said.

The retailer in the past two decades has also been hit by competition from big box discount stores.

Ascena Retail Group announced it would close all 600 Fashion Bug locations in 43 states in the summer of 2012. That announcement came after Ascena acquired Fashion Bug’s parent company, Charming Shoppes, for about $900 million.

A phone call to Ascena was not immediately returned, but on Fashion Bug’s Facebook page, it thanked its customers for their decades of business.

“Goodbye, adios, au revior. No matter how you say it, it’s time for us to go,” it reads. “It’s been our pleasure to serve you.”

The page also offers a “Find a Brand for You” option that links visitors to other Ascena brands, such as Lane Bryant, Catherine’s and Maurices.