The initial balloon of distrust of the market has temporarily deflated after the shake in the institutional board of Inditex by announcing that Marta Ortega will replace Pablo Isla in the presidency of the multinational since April 1.
If investors received the news Tuesday with a drop of up to 6 percent to leave the shares at 27.8 euros, this trend has relaxed throughout the week, leading the company to settle above 28. euros and recover 1.87 percent between the days of Wednesday and Friday.
The consensus of analysts who quarantined Marta Ortega and showed their suspicion of changes in the management of the company, also marks a waiting time without changes in their recommendations or valuation of the target prices since then.
A vote of confidence that Inditex, although separate your way of the management of Pablo Isla, you can face the real challenges that await you.
A company bigger than their names
José Luis Herrera, analyst of Banco Big, He explained in the finance.com podcast this initial upheaval in the market and how it has relaxed while keeping an eye on the changes that may occur in the retail giant.
“The change has undoubtedly surprised […] If there is really going to be an impact in terms of the change of course or in terms of the continuity strategy that the company has, it is what they should take care of clarifying, “Herrera pointed out.
“In a change of this type, the investor, the shareholder, can get nervous, but it is something common. Let us bear in mind that the bar set by Isla is very high,” he added.
The same legacy that sets a high level of demand for the daughter of the founder of Inditex, however, also offers a glimmer of security that the company will be well prepared to face its future.
For this reason, Herrera indicated that “as long as there is a sufficient level of communication” to reassure investors regarding “continuity in the way things are done” within the company, the takeover of Marta Ortega “It will cease to be so relevant.”
The pandemic changed everything, but there is still room for improvement
One of the main challenges that Marta Ortega and her new direction will have to fight is adapting to the sudden changes that retail is experiencing, says analyst Charles Allen from Bloomberg Intelligence.
As Allen explains, Inditex It is moving towards greater digital participation by consolidating stores in larger spaces, in a process of store closures that precipitated during the pandemic.
During this time of restrictions, the improvement of Inditex’s online capacity, supported by investment in technology to guarantee a single view of the inventory in all the company’s warehouses and stores, have maintained the level of consumer purchases in recent years, they point out from the analysis service of the US agency.
This acceptance that “e-commerce will be a major share of revenue and the main driver of growth,” however, is not the only factor on the company’s list of challenges.
Tighter control for a determined revolution
Allen believes that “online commerce is more competitive, especially among test and replay merchants who emulate the short supply chain of Zara“, and also points to the competition of marketplaces such as Shopify, which bring together a greater assortment of products than can be achieved by a single brand.
For this reason, and despite both the adaptability demonstrated by Inditex as well as the recovery of income that the Ortega company is experiencing as the economy reopens, Allen He argues that “the generational change in leadership implies that more fundamental changes may be necessary that could be easier with family leadership.”
The previous managerial succession had involved a focus on cost control, the analysis report details.
And although this situation could continue with Carlos Crespo returning to his role as director of operations, Marta and Amancio Ortega, which control two thirds of Inditex“They could be prepared to take more risks at the helm of the board than a hired board of directors.”