HBS Professor Pankaj Ghemawat and IESE Professor José Luis Nueno prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2003 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

P A N K A J G H E M A W A T

J O S É L U I S N U E N O

ZARA: Fast Fashion

Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind.

— Georg Simmel, “Fashion” (1904)

Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains, continued a trajectory of rapid, profitable growth by posting net income of €€ 340 million on revenues of €€ 3,250 million in its fiscal year 2001 (ending January 31, 2002). Inditex had had a heavily oversubscribed Initial Public Offering in May 2001. Over the next 12 months, its stock price increased by nearly 50%—despite bearish stock market conditions—to push its market valuation to €€ 13.4 billion. The high stock price made Inditex’s founder, Amancio Ortega, who had begun to work in the apparel trade as an errand boy half a century earlier, Spain’s richest man. However, it also implied a significant growth challenge. Based on one set of calculations, for example, 76% of the equity value implicit in Inditex’s stock price was based on expectations of future growth—higher than an estimated 69% for Wal-Mart or, for that matter, other high-performing retailers.1Please follow the below instructions for the case study.
4-5 pages(Body) exclusive of cover, abstract and reference pages (total of approximately 8-9 pages)
Pages must be numbered
Tables, charts, graphs and images are all welcome but are NOT included in the page total (although they will frequently contribute to a good grade!)
Cover page must be APA compliant
Separate abstract page Separate reference page
12 point Times Roman font Double spaced with 1″ margins
The use of headers and sub-headers is strongly suggested
Please make sure the body covers the following points
What is the issue? What is the goal of the analysis? What is the context of the problem? What key facts should be considered? What alternatives are available to the decision-maker? What would you recommend “” and why?