Inditex

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMETHE BUSINESS MODELThe Inditex business model is characterised by a high degree of vertical integration comparedto other models developed by our international competitors. It covers all phases of the fashionprocess: design, manufacture, logistics and distribution to its own managed stores. It has aflexible structure and a strong customer focus in all its business areas.The key element in the organisation is the store, a carefully designed space conceived to makecustomers comfortable as they discover fashion concepts. It is also where we obtain theinformation required to adapt the offer to meet customer demands.The key to this model is the ability to adapt the offer to customer desires in the shortest timepossible. For Inditex, time is the main factor to be considered, above and beyond productioncosts. Vertical integration enables us to shorten turnaround times and achieve greater flexibility,reducing stock to a minimum and diminishing fashion risk to the greatest possible extent.DESIGNSUPPLYMANUFACTUREANDSALESRETAILDISTRIBUTIONLOGISTICSAND3press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMETHE BUSINESS MODEL: DESIGNThe success of Inditex’s collections lies in the ability to recognise and assimilate the continuouschanges in fashion, constantly designing new models that respond to customer desires. Inditexuses its flexible business model to adapt to changes occurring during a season, reacting to themby bringing new products to the stores in the shortest possible time.The models for each season -over 30,000 last year- are developed in their entirety by the creativeteams of the different chains. Over 300 designers -200 for Zara alone- take their main inspirationfrom both the prevailing trends in the fashion market and the customers themselves, throughinformation received from the stores.THE BUSINESS MODEL: MANUFACTUREA significant proportion of production takes place in the Group’s own factories, which mainlymanufacture the most fashionable garments. The Group takes direct control of fabric supply,marking and cutting and the final finishing of garments, while subcontracting the garmentmakingstage to specialist firms located predominantly in the North-West of the Iberian peninsula.The Group’s external suppliers, a high percentage of which are European, generally receive thefabric and other elements necessary for making the clothing from Inditex.Although percentages vary from season to season, in 2006, 64% of production was carried outin Europe and neighbouring countries. A further 34% of total production took place in Asia.THE BUSINESS MODEL: LOGISTICSAll production, regardless of its origin, is received at the logistical centres for each chain, fromwhere it is distributed simultaneously to all the stores worldwide on a highly frequent andconstant basis. In the case of Zara, distribution takes place twice a week and each deliveryalways includes new models, so that the stores are constantly refreshing their offer.4press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMEThe logistics system, based on software designed by the company’s own teams, means thatthe time between receiving an order at the distribution centre to the delivery of the goods inthe store is on average 24 hours for European stores and a maximum of 48 hours for Americanor Asian stores.The location of the distribution centres for the different sales formats is shown below, includingalso future platforms planned to increase global logistics capacity.Narón (A Coruña)Logistical CentreArteixo (A Coruña)Logistical CentreLeónLogistical CentreSallent de Llobregat (Barcelona)Logistical CentreZaragozaLogistical CentreTordera (Barcelona)Logistical CentreMeco (Madrid)Planned PlatformElche (Alicante)Logistical Centre5press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMETHE BUSINESS MODEL: DISTRIBUTION IN THECOMPANY’S OWN STORESThe point of sale is not the end of the process but rather its restart, as the stores act as marketinformation gathering terminals, providing feedback to the design teams and reporting the trendsdemanded by customers. Both the interior and exterior of the store design are given the highestpriority. Here, the shop windows play a major role, acting as authentic advertising for our chainsin the world’s main shopping streets. As for the interior design, the aim is to create a well-litspace where the clothes take pride of place, eliminating all barriers between the garments andthe customers.The main development strategy for the Inditex sales formats is the opening of stores managedby companies in which Inditex is the sole or majority shareholder. In 2006, 89% of stores wereown managed and represented 89% of the Group’s turnover.In smaller or culturally different markets, the Group has extended the store network throughfranchise agreements with leading local retail companies. At the end of the FY2006, there were354 franchised stores out of a total of 3,131 stores.The main characteristic of the Inditex franchisement model is the total integration of franchisedstores with own managed stores in terms of product, human resources, training, windowdressing,interior design, logistical optimisation and so on. This ensures uniformity in storemanagement criteria and a global image in the eyes of customer around the world.CORPORATE RESPONSIBILITYThe Inditex Group defines itself as a responsible and socially committed company and hastherefore developed a business model that conveys its values through the production and saleschains. Consequently, the business strategy is directed towards extensive sustainable principles,reconciling the legitimate desire for economic profitability with formulas for dialogue with itsstakeholders: the customers, employees, suppliers, shareholders and society in general.6press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMEThe guiding principles behind Inditex’s commitment to corporate responsibility are good faithin establishing relations with stakeholders, constant dialogue with stakeholders and socialorganisations, and, finally, transparency in its business activities and, more specifically, in thedevelopment of its sustainability strategy.In recent years new management policies and systems have been designed and put into practicewhich have affected economic, social and environmental dimensions of the company’s performance.These activities are audited by external agents in order to provide greater objectivity in Inditex’sactions in the field of corporate responsibility. Transparency is Inditex’s fundamental managementvalue and enables a frank, open relationship to be established with all groups that hold a stakein our business. The efforts of Inditex in this field have been recognised internationally.Since 2002, Inditex has drawn up a Sustainability Report in compliance with the standards ofthe Global Reporting Initiative (GRI), an independent organisation committed to transparencyin business. The Inditex Sustainability Report summarises and explains Inditex activity underthe triple perspective of the economic, environmental and social dimensions.SALES FORMATSIn order to segment its approach to the market, Inditex has eight fashion distribution chains,all of which share the same commercial and managerial focus: to be leaders in their segmentthrough a flexible business model and an international scope. However, each of the chains hasa great deal of autonomy in managing its business; their management teams are independentin commercial decision-making and in the way they administer their resources.Nonetheless, the fact that they belong to a group spread over 64 countries provides a greatnumber of organisational and knowledge-management synergies. Thus, each management teamcan concentrate on developing its business in the knowledge that certain support elements arecovered by the Group’s accumulated experience.Inditex, as the parent company, is responsible for the central corporate services, i.e. thoseservices shared by the eight chains and which facilitate international growth: administration,the use of logistics technology, the general HR policy, legal issues, and financial capacity, amongothers.7press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMESALES FORMATS: ZARAZara (www.zara.com), whose first store opened in 1975 in A Coruña (Spain), is present in 63countries, with a network of more than 1.000 stores, ideally located in major cities. Its internationalpresence clearly shows that national frontiers are no impediment to sharing a single fashionculture. Zara moves with society, dressing the ideas, trends and tastes that society itself hascreated. This is the key to its success among people, cultures and generations that, despite theirdifferences, all share a special feeling for fashion.With a creative team of more than 200 professionals, Zara’s design process is closely linked tothe public. Information travels from the stores to the design teams, transmitting the demandsand concerns of the customers. The vertical integration of activities (design, production, logistics,and sales in the company’s own stores) means Zara is flexible and fast in adapting to the market.Its model is characterised by continuous product renovation: new articles reach the stores twicea week. Zara pays special attention to the design of its stores, its shop windows and interiordecor, and locates them in the best sites of major shopping districts. Its central services arelocated in Arteixo (A Coruña).ZARA20062005No. of storesTurnover*% international sales% of Inditex9905,35272.365.38524,480.868.965.9* in millions of euros8press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMESALES FORMATS: SKHUABANSkhuaban (Kiddy’s Class in Spain and Portugal) is the chain in the Group that specialises inchildren's fashion. In addition to clothes, this sales format offer includes other products suchas fragrances or cosmetics for kids. The stores are designed with separate spaces for boy’s andgirl’s fashions, as well as separating items by age to make shopping easier for customers. Ithas more than 180 stores in five countries.SKHUABAN20062005No. of storesTurnover*% international sales% of Inditex18518214.52.2149155.4142.3* in millions of eurosSALES FORMATS: PULL AND BEARPull and Bear (www.pullandbear.com) was set up by the Inditex Group in 1991. Since itscreation, its fashion concept has known how to adapt to the needs of young people, and isnow a clear point of reference for casual, laid-back clothing. Pull and Bear aims to be somethingmore than just a point of sale. As well as the clothes and accessories, the chain offers specialspaces in the stores in which the display fixtures are combined with recycled elements fromthe past, to create the kind of surroundings that young people love. Pull and Bear has morethan 460 stores in 27 countries. Its central services are located in Narón (A Coruña).PULL AND BEAR20062005No. of storesTurnover*% international sales% of Inditex46751940.26.3427445.133.26.6* in millions of euros9press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMESALES FORMATS: MASSIMO DUTTIMassimo Dutti (www.massimodutti.com) was founded in 1985 and acquired by Inditex in 1991.Today, it has more than 390 stores in 30 countries. Massimo Dutti offers quality internationalfashion design for men, women and children, with a variety of collections that range fromsophisticated urban fashions to casual wear. Its central services are located in Tordera (Barcelona).MASSIMO DUTTI20062005No. of storesTurnover*% international sales% of Inditex39961449.47.5369533.845.67.9* in millions of euros10press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMESALES FORMATS: BERSHKABershka (www.bershka.com) was founded in 1998 as a new store and fashion concept,targeting the young female market. Since 2002 it has also sold men’s fashion. Bershka storesare large and spacious with a cutting-edge look. They are designed as meeting points forfashion, music and street art. The chain has more than 430 stores in 25 countries. Its centralservices are located in Tordera (Barcelona).BERSHKA20062005No. of storesTurnover*% international sales% of Inditex433798459.7368639.441.59.5SALES FORMATS: STRADIVARIUS* in millions of eurosStradivarius (www.e-stradivarius.com), a chain acquired by Inditex in 1999, brings the latesttrends in design, fabrics and accessories to a young female public. Its spacious stores (over300 in 19 countries) have a modern, dynamic design and offer a wide range of fashionpossibilities, with a casual and imaginative style. Its central services are located in Sallentde Llobregat (Barcelona).STRADIVARIUS20062005No. of storesTurnover*% international sales% of Inditex30442819.75.2263341.117.45.1* in millions of euros11press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMESALES FORMATS: OYSHOOysho (www.oysho.com) started business in 2001. This format brings the philosophy of theInditex Group to the women's lingerie and underwear sector, offering the latest trends withquality products at reasonable prices. It has more than 200 stores in 13 countries. Its centralservices are located in Tordera (Barcelona).OYSHO20062005No. of storesTurnover*% international sales% of Inditex20116535.1215410731.81.6SALES FORMATS: ZARA HOME* in millions of eurosZara Home (www.zarahome.com) is the latest chain to be created by the Inditex Group. Itspecialises in home furnishings, focussing on textiles, such as bed, table and bathroom linen,complemented by tableware, cutlery, glassware and decorative items. Zara Home offers design,quality and innovation at competitive prices. It has more than 150 stores in 15 countries. Itscentral services are located in Arteixo (A Coruña).ZARA HOME20062005No. of storesTurnover*% international sales% of Inditex15213935.41.711078.1231.2* in millions of euros12press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMEINTERNATIONAL EXPANSIONTimeline of Inditex´s entry into international markets:1975SpainArgentina, United Kingdom, Venezuela, Lebanon, Turkey, United Arab Emirates and Kuwait19981988PortugalThe Netherlands, Germany, Poland, Saudi Arabia, Bahrain, Canada, Brazil, Chile and Uruguay19991989USAAndorra, Qatar, Austria and Denmark20001990FrancePuerto Rico, Ireland, Jordan, Iceland, Luxembourg, Czech Republic and Italy20011992MexicoEl Salvador, Finland, Dominican Republic, Singapore and Switzerland20021993GreeceRussia, Malasya, Slovenia and Slovakia20031994Belgium and SwedenHong Kong, Morocco, Estonia, Latvia, Hungary, Romania, Lithuania and Panama20041995MaltaCosta Rica, Thailand, Monaco, Philippines and Indonesia20051996CyprusSerbia, Tunisia and Mainland China20061997Norway, Japan and IsraelThe first Zara store opened to the public in A Coruña (North-Western Spain) in 1975. Overthe following decade it continued to open new stores throughout Spain. In 1988 it debutedin Porto (Portugal), and in the next few years, the first stores were opened outside the IberianPeninsula, in New York (1989) and Paris (1990). This was the beginning of a process leadingup to the current presence in 64 countries in Europe, the Americas, Asia and Africa. It sucessamong people, cultures and generations which, despite their differences, all share a specialfeeling for fashion lies in the conviction that national frontiers are no impediment to sharinga single fashion culture.13press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMEThe usual way of entering a new market is to start with a small nember of stores, which canexplore the possibilities of a specific country in order to gain a critical mass of customers. Thenew formats incorporated into the Group since 1991 share the same international approachas Zara -in fact, that is one of their fundamental characteristics. As a result, all of them havegrown simultaneously in Spain and in other countries. In most cases, Zara has been the firstchain to break into new countries, accumulating experience which has helped the laterimplementation of the rest of the concepts. This accumulated experience has also allowed theaccelerated international expansion of the more recently created chains.SALES BY GEOGRAPHICAL AREAS / 200636.9%11%Spain8.9%Rest of EuropeAmericaRest of the world40.6%14press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMEAmancio Ortega Gaona, chairman and founder of Inditex, was born in1936 in Busdongo de Arbas, León. He moved to A Coruña with his familyat an early age, and it was there that he began his business activities inthe textile sector. After working with two well-known establishments inA Coruña, he ventured out with a business project of his own.His first steps culminated in the creation, in 1963, of the companyConfecciones GOA, a garment manufacturing company. Following an initialstage of growth in the area of production, the first store of the Zara chainopened on a central A Coruña street in 1975. In 1985, Amancio Ortegaintegrated Zara in a new holding company, Industria de Diseño Textil,INDITEX S.A.In 2001 the Amancio Ortega Foundation was set up, a private non-profitorganisation aimed at promoting all types of activities in the fields ofculture, education, research and science.Pablo Isla, First Deputy Chairman and CEO of Inditex,was born in Madrid in 1964. He is a graduate of Lawfrom the Complutense University of Madrid and statelawyer. He chaired the Board of Directors of Altadis andwas joint-president of this group from July 2000.From 1992 to 1996 he was Director of Legal Services forBanco Popular. He went on to be appointed GeneralDirector of State Assets at the Ministry of Economy andFinances. In 1998, he rejoined Banco Popular as GeneralCounsel, until he was appointed in the Altadis group.15press dossierINDITEX

INDITEXZARA SKHUABAN PULL AND BEAR MASSIMO DUTTI BERSHKA STRADIVARIUS OYSHO ZARA HOMEINDITEX GROUP TIMELINE19631974Amancio Ortega Gaona, chairman and founder of Inditex, begins his business activities as a clothing manufacturer. The business growssteadily over the next decade until it has several production centres, distributing their products to different European countries.1975197619841985Zara is founded with the opening of its first store in a central street in A Coruña (Spain).The Zara fashion concept is well received by the public, allowing it to expand its network of stores to the main Spanish cities.The creation of Inditex as the head of the corporate group.19861987The manufacturing companies in the Group direct their total production to the Zara chain and establish the basis for a logistics systemto match the expected high growth rates.19881989199019911992199419951996The opening of the first Zara store outside Spain occurs in December 1988 in Porto (Portugal).The Group expands to the United States and France with the opening of outlets in New York (1989) and Paris (1990).The founding of the Pull and Bear chain and the purchase of 65% of the Massimo Dutti Group.Inditex continues to open new international markets: Mexico in 1992, Greece in 1993, and Belgium and Sweden in 1994.Inditex acquires the whole of the share capital of Massimo Dutti. This year also sees the opening of the first store of the Group in Maltaand, in the following year, in Cyprus.1997Norway and Israel join the list of countries in which Inditex is present.1998The Bershka chain, targeting the younger female market, begins activity in a year which also sees the opening of stores in new countries:United Kingdom, Turkey, Argentina, Venezuela, United Arab Emirates, Japan, Kuwait and Lebanon.1999The acquisition of Stradivarius makes it the fifth chain of the Group. Stores are also opened in new countries: The Netherlands, Germany,Poland, Saudi Arabia, Bahrain, Canada, Brazil, Chile and Uruguay.2000Inditex installs its central services in a new building in Arteixo (A Coruña, Spain). The opening of stores in four new countries: Andorra,Austria, Denmark and Qatar.2001The launch of the Oysho lingerie chain. On 23 May 2001 Inditex goes public and is listed on the stock market. During this year theGroup expands into: Ireland, Iceland, Italy, Luxembourg, Czech Republic, Puerto Rico and Jordan.2002Work begins on the new Zara logistical centre in Zaragoza (Spain). The Group opens its first stores in Finland, Switzerland, El Salvador,Dominican Republic and Singapore.2003The opening of the first Zara Home stores, the eighth chain in the Group. Inditex inaugurates its second Zara distribution centre,Plataforma Europa, in Zaragoza (Spain), complementing the activity of the Arteixo logistical centre (A Coruña, Spain). The first storesof the Inditex Group are opened in Slovenia, Slovakia, Russia and Malaysia.2004The Inditex Group opens store number 2,000 in Hong Kong, thereby reaching a presence in 50 countries in Europe, The Americas,Asia and Africa. In this year the first store also opens in Morocco, Hungary, Romania, Estonia, Latvia, Lithuania and Panama.2005The Group opens its first stores in Costa Rica, Monaco,Thailand,Philippines and Indonesia.2006 Mainland China, Tunisia and Serbia join the list of countries in which Inditex is present.16For more information:INDITEXCommunication and Institutional Relations Corporate Division+34 981 185 400comunicacion@inditex.comThis press dossier was updated on 21/03/2007press dossierINDITEX