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Why Inditex’s Leader Was Named Best Performing CEO in the World for 2018

Once again, Pablo Isla is on top of the business world.

The Inditex boss, with brands under his belt including Zara, Massimo Dutti and Bershka, was named Harvard Business Review’s best-performing CEO in the world for the second year in a row.

Referring to the leaders that made its list, Harvard Business Review said, “They face an array of outside forces—savvy competitors, demanding customers, profit-hungry investors, political and economic headwinds. Nonetheless, their companies have shown a remarkable ability to sustain momentum.”

Part of the thought-process behind its picks, Harvard Business Review said, is that it’s based on the leaders’ ability to succeed over the long-term.

“It’s based primarily on financial returns over each CEO’s entire tenure—and because these CEOs have been successful, many have enjoyed a long run in the job,” Harvard Business Review said, noting that CEOs on the list have been in their positions for an average of 16 years, compared to an average of 7.2 years for S&P 500 CEOs in 2017.

LVMH CEO Bernard Arnault took the No. 3 spot, followed by Kering boss François-Henri Pinault ranking No. 4. Nike CEO Mark Parker came in at No. 14, with Tadashi Yanai, leader of Uniqlo parent Fast Retailing at No. 35, and Tencent CEO Hauteng “Pony” Ma at No. 50, making the only apparel leaders in the top 50. Jeff Bezos came in at No. 68 on the list.

One apparel leader that didn’t make it back on the list this year? L Brands’ Leslie Wexner, since the Victoria’s Secret parent company’s stock has taken a major hit this year. For the year to date, the company’s stock price has dropped fairly steadily, from a high of $59.89 on Jan. 2 to just $30.09 as of early trading Tuesday.

“One of the tests of any leader is how he or she adapts to a shifting environment,” Harvard Business Review said. “Among the biggest shifts companies face right now is in the global political environment. The rise of populism as a potent force is most apparent in the election of Donald Trump and Great Britain’s departure from the European Union, but it’s evident in many other regions, too. For business leaders, especially in manufacturing, this has brought the threat (and sometimes the reality) of tariffs and trade wars, along with industry-specific opportunities and challenges.”

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Despite general retail malaise, a changing—and increasingly demanding—consumer, and the discounting conundrum, Inditex has been able to remain relatively unflustered.

For the first half of 2018, Inditex posted a 3 percent year over year growth in net sales to 12 billion euro ($13.6 billion). Profits climbed 4 percent higher, reaching 6.8 billion euro ($7.75 billion), and management pegged margin expansion estimates at up roughly 50 basis points. Net sales for Zara, the company’s marquee brand, totaled 7.9 billion euro ($9 billion), or 66 percent of Inditex’s total sales in the first half of the year.

“The Interim half year of 2018 has been a period of significant growth for Inditex globally,” Isla said during the first half results conference call. “We operate a unique global sales platform that fully integrates stores and online and offers huge growth potential.”