Letter from the Chairman

Dear Friends,

Inditex's year 2012, of which this Annual Report aims to give a detailed and faithful picture in every way, has been a year characterised by the great effort made by our teams throughout the world, by the achievements resulting from this work and by the challenges for the future that we have set for ourselves. We are looking once again, as we must state each year when taking stock, at another good example of the ambition for a job well done that characterises Inditex's teams. Those of us who are lucky enough to be part of this constantly growing team - there are already over 120,000 of us - can be very proud of this. Personally, I must thank each and every person who is part of Inditex for their invaluable contribution to the company's results and, above all, for the fact that, thanks to their daily effort and responsibility, we can continue to set new challenges for the future.

This past year has been characterised by strong growth in our business, which has been reflected in an increase of 16% in the Group's turnover, up to €15,946 million. A significant part of this huge increase has been the increase in like-for-like sales, which stood at 6% and that shows our continued ability to adapt our sales formats to the demand of our customers. This has been accompanied by a growth in sales resulting from the new retail area, with 482 net openings. Special attention must be paid to the fact that, throughout 2012, we have been able to open new stores in 64 different markets, which shows the potential for global development of Inditex's retail formats.

This potential is also reflected in online sales; in addition to the online presence in a number of European countries and in markets of such importance as the U.S. and Japan, the China online store was added in 2012, bringing the total to 22 markets. Already in 2013, online sales began in Canada, with the plan of launching in Russia in autumn of this year.

This growth was supported by a very intense investment volume, with ordinary investments of over €1,000 million, aimed primarily at the opening of new stores and the refurbishment of existing stores. The aspect of refurbishments has been - and will continue to be in the near future - particularly meaningful, both because of what it means in terms of renewing the image of our establishments, and because of the progress of our commitment to the eco-efficiency of our stores. In this latter sense, it is worth noting that, at present, a significant percentage of the Group's sales points responds to the eco-efficiency criteria set by the Strategic Environmental Plan, and that we are moving decisively toward the goal of ensuring that, by 2020, the whole of the network will meet these requirements.

As we have been doing since the beginning of this journey of increasing the environmental sustainability of our business, some of the most significant projects continue to receive the strictest environmental certifications. An example of this is the new Zara Home store in Munich or, already in 2013, the Paris Champs Elysées Zara store, both of which have been given the US Green Building Council's LEED certification.

One aspect that I would like to highlight in relation to the investment policy is our continued commitment to improving the activities of our central services and distribution centres, all of which are located in Spain. During 2012 the activities of the new Massimo Dutti complex in Tordera began, with new buildings both for its headquarters - which houses its management, sales and design teams - and for a new logistics centre that can be considered to be at the forefront of technology applied to this area.

2012 also saw the beginning of the expansion works at Inditex's headquarters in Arteixo, which will be completed this year and will equip Zara and Zara Home with a new space - of approximately 70,000 square metres - suitable for meeting the needs resulting from its international growth. On the other hand, it is envisaged that the works in the town of Cabanillas (Guadalajara, Spain), that will result in the launch of Inditex's ninth logistics platform, will begin in 2013.

All these investments, and the growth of the activity to which they relate, are immediately reflected in an increase in the number of people employed by the Inditex Group, both in Spain and in the rest of the world. During 2012, this increase materialised in the creation of almost 11,000 net new jobs, reaching a total number of 120,314 professionals. Employment grew in Spain and in virtually all markets. As an example of the degree of international expansion, it is worth highlighting that, in addition to in our original market, there are now over one thousand employees in eighteen other markets.

The steady increase in the size of our workforce also places us under an obligation to make a greater effort to maintain the distinctive aspects of our people management policy, which are key to attracting and retaining the talent on which the strengths of our business model are supported. Training, which in 2012 was given to over a third of employees; internal promotion, which involved one of every five employees; and the steady progress in guaranteeing equality and the achievement of a work-family balance are the pillars which support this policy, whose most eloquent result is the degree of motivation and commitment of our teams.

I do not wish to end this brief review of the salient features of financial year 2012 - which we could summarise as the strength of our growth, investment and employment - without also mentioning the great effort made in the area of social responsibility, and particularly in the constant task of improving working conditions in the textile industry. Inditex's level of rigour with regard to achieving this goal - of which its commitment to the United Nations Global Compact, its membership of international platforms such as the Ethical Trading Initiative or the Sustainable Apparel Coalition, or its collaboration with the international federation of trade unions IndustriALL are all examples - is a challenge that is renewed every day. Our goals in this area are constantly being analysed and revised. It is always possible to strive for progress and we are committed to redoubling our efforts and attention.

We will therefore continue to dedicate each day's work to consolidate the growth of our business, and to do so on a sound and sustainable basis, both from an economic point of view and from a social and environmental one, with the commitment called for by our customers, employees and shareholders.

Pablo Isla
Chairman