Dive Brief:

• Inditex's board of directors is considering the appointment of Chief Operating Officer Carlos Crespo as chief executive, splitting the roles of CEO and executive chairman, the Zara owner said on Thursday. Crespo would be responsible for technology (systems, data & digital); IT security, logistics and transportation; construction and works; legal; and procurement and sustainability. In the role he would work with Executive Chairman (also currently CEO) Pablo Isla to define the overall business strategy, the company said. 

• The proposed change comes at the behest of Isla, who would remain in his board position, with Crespo reporting to him, according to a company press release. The board is taking the idea up at its annual meeting in July and the change would be in effect upon approval.

• Crespo joined Inditex in 2001 as head of accounting policies in its finance department. Later he took on administrative management of inventories at the company's logistics platforms, then in 2005 assumed responsibility as internal audit director, the company said. He was named COO last year.

Dive Insight:

Movement at the top is a major shift for any company, but this one bodes well for Inditex, according to Maureen Hinton, GlobalData Group retail research director, who said such a set-up is "generally regarded as good governance."

In some cases, as at J. Crew, having a former CEO sit on the board can cause friction that interferes with that governance. But Inditex's plans appear to be smooth, Hinton said.

"This does seem a sensible move as he knows the company well having worked across the business since 2001," she said of Crespo in an email to Retail Dive. "And he will still be mainly focusing on the operating side of the business and expanding its digital development and sustainability, while Pablo Isla will continue driving the business strategy. The implication is that this is a succession plan with Crespo gradually taking on a wider CEO role as Isla works with him on strategy."

Isla said Crespo "has been doing excellent work in several areas of the company in his capacity as COO and his contribution will be vital at a time marked by Inditex’s strategic digital transformation and far-reaching commitment to sustainability." Inditex, whose brands also include Massimo Dutti and Uterqüe, has moved to become "fully digital, integrated with the online platform and sustainable by 2020."

That strategy, which Isla announced in September last year, entails all of the company's brands selling online across the globe by that year, including where it has no stores. That was a vote of confidence in its own logistics, which years ago revolutionized apparel retail with a speedy supply chain that delivers on-trend apparel to stores.

It's also an ambitious play, especially considering the company's scope: Inditex is one of the largest global fashion retailers, with nearly 7,500 stores in 96 markets and over 174,000 employees. That, plus other challenges before the company, may be better tackled by two leaders rather than just one. While Inditex stoked sales to a new peak last year, profit growth took a hit. In the period, rival fast-fashion retailer H&M was driving down prices to clear inventory, which may have forced its own markdowns, and the higher costs of e-commerce may have also taken a toll. In March, Inditex reported that fiscal year 2018 net sales rose 3% (7% in local currencies) "to an all-time high" of 26.1 billion euro, or $29.6 billion. Online sales rose 27% to 3.2 billion euro, accounting for 14% of sales in markets with stores. Comps rose 4% in the year, with positive same-store sales across all regions and brands, both online and in stores, the company said.

Inditex and other fast-fashion retailers may be feeling a loss of their advantage in swiftly bringing runway styles to their racks as luxury brands speed up their own operations.