Zara boss takes over Bill Gates to become world's richest man

Amancio Ortega, owner of Zara empire and now the world's richest man. Photo / Getty Images

The Spanish founder of the Zara fashion chain has overtaken Bill Gates to become the world's richest man.

Amancio Ortega's personal fortune leapt by $1.7 billion this week to $79.5 billion - taking the Inditex owner past the Microsoft co-founder's estimated $78.5 billion.

Already Europe's richest man, the 80-year-old - whose glamorous daughter Marta is expected to take over management of the business - now tops the global list.

Marta, 31, has undergone training at the firm, including stacking shelves when she was younger.

Despite rumours that she is due to succeed her father, Inditex - parent company to Zara, Massimo Dutti and Pull&Bear - will not confirm her as successor.

Forbes reported that Ortega became the world's richest man on Wednesday when Inditex shares went up 2.5 per cent.

He now has a larger net worth than US investor Warren Buffett and Amazon founder Jeff Bezos.

It is not the first time Ortega has topped the list. He was briefly ahead of Bill Gates in October before a surge in Microsoft shares put him back in second place.

The son of a railway worker from La Coruna in Spain, Ortega transformed clothing group Inditex from a tiny family dressmaker into Spain's biggest company.

He has turned Zara into a byword in chic for the money-conscious, transforming the apparel business with its "fast fashion" model.

Affordable imitations of catwalk designs can move from drawing board to store within two weeks, and poor sellers are pulled off the shop floor even quicker.

Last year, his sales blossomed as Inditex shares rose nearly 40 per cent.

He holds a 59.3 per cent stake in what is now the world's biggest fashion retailer, ahead of Gap and Hennes & Mauritz.

It grew from humble beginnings in the rainy northern region of Galicia to more than 6,000 stores in some 90 countries with a stable of brands from high-end label Massimo Dutti to homewear chain Zara Home.

Zara.

The group is only the third Spanish firm ever to be valued above 100 billion euros, after bank Santander and telecoms giant Telefonica, both of which now lag well behind.

In a country recently emerged from a recession that destroyed businesses and jobs, Ortega is a rare self-made mogul.

The son of a railway worker started his professional life at 14 as a delivery boy with a shirtmaker in the wind-swept northern city of Coruna.

Within a few years he had set up a workshop making night gowns, lingerie and baby wear, and the first Zara opened in Spain in 1975.

Ortega never gives interviews and is rarely photographed. He did not even attend the inaugural ringing of the stock market bell at the Madrid exchange when Inditex floated in 2001.

In person, Ortega is a persuasive and enthusiastic businessman, who despite progressively handing over the day-to-day management of the company over the last decade continues as an active part of it, people familiar with Inditex say.

He is known for selecting designs based on feedback from shop assistants who zero in on shoppers' reactions.

"If he speaks to a shop assistant and he likes what they had to say, he will pay more attention to that than to any of his managers," a former Inditex director told Reuters.

Since his ex-wife and Inditex co-founder Rosalia Mera died suddenly in August 2013, there has been intense speculation over the succession.

His second wife Flora Perez, 61, sits on the board.

Ortega's majority stake in Inditex is held through another company, Pontegadea Inversiones, which Ortega has also used to channel the steady flow of dividends and build up a real estate portfolio with assets worth 8 billion euros at end-2014.

This, as well as favourable inheritance laws in the Galician region, means that his heirs are likely to keep a tight control over the fashion empire.

In July it was reported that Ortega's real estate assets in 2015 topped 6 billion euros alone.

Using massive dividend payouts from Inditex, which have nearly doubled over the last five years, Ortega has made largely debt-free purchases of prime buildings from London to New York, becoming a major commercial real estate player over that period.

"All the buildings he buys are in prime districts. It's a steady, reliable income stream, almost like a sovereign bond," said Carles Vergara, finance professor at IESE Business School.

Ortega's first big real estate purchase was Torre Picasso, an office building in Madrid, bought in 2011 around the time he handed the daily running of the world's biggest clothing retailer to chief executive officer Pablo Isla.

Since then he has bought properties including an office block in London's Mayfair; a stretch of London's prime shopping drag Oxford Street; and the historic cast-iron clad E.V. Haughwout Building in SoHo, New York, which housed a world- famous cut glass and porcelain store in the 19th century and featured the world's first passenger elevator.

Ortega not only rents out his commercial property to Inditex stores like Zara and upmarket label Massimo Dutti at market rates, but also to rivals such as H&M of Sweden and Gap of the United States.

In Madrid, he owns No. 32 on the Spanish capital's main shopping drag Gran Via. The Art Deco building, built as one of the city's first grand-scale department stores in the 1920s, now houses biggest store in Spain for arch-rival Primark.

In February, Ortega made his first foray into Asia, buying a 22-storey plaza in Myeongdong, Seoul's trendy shopping district.

HOW THE RETAILER FAVOURED BY KIM KARDASHIAN IS ACCUSED OF DUPING CUSTOMERS OUT OF BILLIONS

Zara has been accused of duping millions of American consumers in a massive pricing scam, according to a $5 million class action lawsuit obtained exclusively by Daily Mail Online.

The suit alleges that the Spanish retail giant "deceived" US consumers through classic "bait-and-switch" pricing that leads to people paying "well in excess" of the tag amount.

It states that the "fraudulent" pricing practices have been used across the US, enriching Zara - a favorite of Kim Kardashian and Kate Middleton - to a tune of billions of dollars.

The suit was brought by high profile Los Angeles lawyer Mark Geragos whose firm carried out an investigation into Zara's "unlawful" pricing practices and says the clothing firm perpetuates the 'deception' in two ways.

According to the suit, Zara USA Inc tags clothing only in Euros, which is itself confusing to many consumers, and lures them to the register.

But to make matters worse, the suit claims, not only is the same product sold for a substantially higher amount in dollars, but the product is always sold well in excess of the true converted amount, if it were to be converted using that day's foreign currency rates.

This dodgy practice is known as "bait-and-switch" in the fashion industry.

A spokesperson for Zara USA said: "Zara USA vehemently denies any allegations that the company engages in deceptive pricing practices in the United States."