sustainability report

2004

SustainabilityReport

Sustainability Report INDITEX TABLE OF CONTENTS 3

00_0 Table of contens

2

01_0Letter from the Chairman 14

02_0Perspective and strategy 6

03_0Business profile 10

04_0Shareholders 1404_1 Our shareholders 04_2 Communication channels 04_3 Share development

05_0Customers 2005_1 Our commitment05_2 Model for customer relations

06_0Employees 2606_1 Our people06_2 Our objectives, policies and activities

07_0Suppliers 3607_1 Our model of responsibility 07_2 Programmes to verify level of compliance with

the Code of Conduct for External Manufacturersand Workshops

07_3 Programmes for the creation of internal and external Social Capital

08_0Society 4408_1 Our social commitment08_2 Community development programmes 08_3 Emergency programmes08_4 Sponsorship and patronage programmes 08_5 Platforms for dialogue 08_6 Open to society

09_0Environment 6609_1 Our model of sustainable growth09_2 Strategic plan 2002-200509_3 Environmental controls09_4 Indicator system09_5 Relationships with interest groups

10_0Economy 8010_1 Basic amounts10_2 International expansion10_3 Segmented information10_4 Inditex format by format10_5 Corporate cash flow10_6 Indicators of economic performance 10_7 Further indicators

11_0Good Governance 9611_1 Corporate Governance Structure 11_2 Risk management

12_0Annexes 10212_1 GRI Summary 12_2 Independent validation

Sustainability Report INDITEX LETTER FROM THE CHAIRMAN 54

01_0 Letter from the Chairman

audits on our supplier database, completingthose relating to European companies,Morocco, Peru and Brazil which represent70% of our products- and starting the processin Asia.

An important feature of this process is applyingthe methodology developed by the BusinessSocial Compliance Initiative, an organisation ofwhich Inditex is a member and which bringsthe leading European textile distributorstogether. The goals of the BSCI includeimproving the social regulations of the countriesthat play an important role in textile supply, incollaboration with the suppliers, governmentsand other parties involved. BSCI also aims to bea forum for members to exchange theirknowledge and a meeting point for the latterand consumers. Maximum transparency isguaranteed by the distributors.

The philosophy behind our sustainability modelactions is to encourage the improvement of theconditions in which trade is carried out insupplier countries, involving governments,business organisations and trade unions, not tomention NGOs, in our shared responsibility. Forits part, Inditex believes that this audit processwould only be complete with a program ofcorrective plans that help our business partners

to overcome any failings detected. At the sametime, the global approach of our sustainabilitymodel is rounded off by setting up social actionprograms targeted at the environment in whichwe operate. Special attention is paid to moresusceptible groups and action is focused onareas such as education, health or socialintegration. We feel that this guarantees a moresignificant contribution towards socialtransformation and improvement.

All of Inditexs efforts channelled into applyingthe sustainability model to its activities arebased on our double conviction that thisapproach meets the demands of both the groupthat forms part of the company shareholders,business agents and business partners andthose of our customers, with a commitment toquality in terms of our range of products andservices. This quality would not be completewithout the value-added service that we providedirectly to our customers a keen emphasis ondesign and attractive prices and that which weprovide to society as a whole through improvedsocial, environmental and business governancepractices.

Amancio Ortega GaonaChairman

Dear shareholders,

Over recent years, many businesses worldwidehave considered the need to take on thedemands of their surroundings in terms ofsocial and environmental responsibility. Thisapproach has become an important strategyinsofar as the business world has understoodfirstly, the opportunity cost due to not meeting agrowing social demand for transparency andsecondly, its agreement with the generalinterests of companies.

This does not mean that the vast majority ofcompanies, Inditex included, have not alwaysbeen concerned about the impact that theiractivities have had on society, over and abovetheir legitimate economic interests. Thisconcern has been reflected in their humanresources policies, in their dealings withbusiness partners, suppliers, organisations andsocial institutions, and even in their conceptionof customer relationships. This said CorporateResponsability policies have often taken secondplace to fulfilling business development targetsand, ultimately, creating value for shareholders.

Early on, corporate responsibility was limited toa philanthropic expression, generally related tothe principles of the companys main

shareholders and business agents. Later, as aresult of the pressure from trade unions, NGOsand citizen groups, during the second half ofthe 20th Century, companies began toimplement an essentially defensive policy. Overthe past decade, this has become the doctrineof corporate reputation as a shield against risksdue to actions that do not respect generalinterests.

Knowing that this approach was not enough tomeet the demands that companies face today,Inditex implemented a responsibility modelbased on the idea of sustainability. Inaccordance with the principles that govern ourcommitment good faith, dialogue andtransparency, we set up a Code of Conductthat lays the foundations for Inditexsrelationships with interest groups. ThisSustainability Report, prepared in accordancewith the Global Reporting Initiativerecommendations, is a way of expressing thiscommitment.

Perhaps the aspect that sparks off the mostinterest as far as the sustainability policy isconcerned is controlling the supply chain. Inthis regard, we can state that we are satisfiedwith the progress made in 2004. Over thecourse of this year, we have passed 100% of

our interest groups

triple d

imensi

on

2Shareholders

9 Good Governance

3 Customers

5 Suppliers

4Employees

6 Socie

ty

7Environment

8 Economy

1 Busin

ess profile

6 Sustainability Report INDITEX PERSPECTIVE AND STRATEGY 7

02_0 Perspective and strategyInditex views Corporate Social Responsibility as a strategic factor within its managementprocedure. We are convinced that the growth of our organization is closely linked to theeconomic, social and environmental commitments we establish with all of the differentgroups we are involved with: our shareholders, customers, employees, suppliers andsocial players

We believe that we must respect andencourage values of sustainability in all thethings we do, formalizing and putting intopractice policies and management systemsin the three areas in which the company isinvolved social, economic andenvironmental acting according to criteriaof transparency, and establishingindependent mechanisms for control andevaluation.

We believe that our responsibility as acompany should be measured by our abilityto respond to and anticipate the expectationsand demands of our main interest groups.

We believe that interest groups form anintrinsic part of our corporate structure,contributing as partners towards our growth.For this reason we have decided to situateour shareholders, employees, suppliers,customers and social players at the veryheart of our business.

Our activities in terms of SocialResponsibility have a social, economic andenvironmental scope, unavoidably involvingour interest groups both in establishing goalsand commitments, as well as in developingspecific programmes.

The Corporate Governance model acts as adriving force and guarantee of the modelthrough different bodies and documents.

Our model of sustainability_

8 Sustainability Report INDITEX PERSPECTIVE AND STRATEGY 9

_ISO 14.001 Certification in all of distribution centres, factories and head offices

_Programme for implanting the sustainable management model in our stores

_Reduction of waste and harmful emissions

_Energy saving plan and investment in renewable energies

_Awareness plan: competition amongst employees to choose the mascot

_We eliminated the minimum share requirement to take part in the Annual shareholders Meeting

_New, more accessible corporate website

_Increase in shareholder dividends: of 150%

_Inclusion in the FTSE4Good and Dow Jones Sustainability indexes

_ 2,620 independent audits carried out in factories in more than 30 countries

_ Social involvement projects in the communitieswhere our suppliers employees live. Projectsin Morocco and Peru

_ Halve the number of manufacturers in 2005

_ Develop social intervention programmes in our suppliers employees communities

_Social development programmes in Latin America

_Solidarity projects in emergency situations: in Spain (Prestige) and in South-East Asia (tsunami)

Our commitments_

_with our

shareholders,with their needs and espectations

costumers,offering stable, just and quality employment

employees,with a Code of Conduct that guarantees

their working conditions

suppliers,_to

respecting Human Rights and theimprovement of economic conditions

wherever we carry out our work

society,_with the

with a global policy to respect and protectour natural surroundings

the enviroment,

Activities 2004_

for transparency and good governance

_Extension of our network of stores (322 more)

_Plan for training employees incustomer service

_Stopped selling fur items

_ 7,867 new employees

_ 70% full-time contracts

_ Plan for identifying potential and internal promotion

_with our _with our _with our

03_0 Business profile

Through our activity we contribute towards improving the social,economic and environmental conditions of our surroundings. In2004 our turnover amounted to Euros 5,670 million, anincrease of 23% over the previous year. We created 7,867 newjobs, and have entered eight new markets.

We believe that the growth of our organization is based on the commitmentwe have with our interest groups.

10 Sustainability Report INDITEX BUSINESS PROFILE 11

12 Sustainability Report INDITEX BUSINESS PROFILE 13

Sales by format

Breakdown of sales by geographical area

Inditex makes its business proposalthrough eight fashion distribution chains:Zara, Kiddys Class, Pull and Bear,Massimo Dutti, Bershka, Stradivarius,Oysho and Zara Home. Zara is the largestchain with the most sales outlets and abroader international presence. It is alsothe main contributor to the Groups sales,bringing in 67.4% of the total in 2004.

Format 2004 2003 04/03

Zara 3,819.6 3,219.6 19%Kiddys Class 120.6 89.7 35%Pull and Bear 378.9 287.9 32%Massimo Dutti 481.3 388.9 24%Bershka 516.0 395.0 31%Stradivarius 241.9 162.0 49%Oysho 71.7 45.1 59%Zara Home 40.4 10.6 279%

Sales total 5,670.4 4,598.9 23%

2004 2003

67.4% 70.0%2.1% 1.9%6.7% 6.3%8.5% 8.5%9.1% 8.6%4.3% 3.5%1.3% 1.0%0.7% 0.2%

100% 100%

Millions of eurosweighting

(%)

2004 04/03 2003 2002 2001 2000 CAGR 04/00

Turnover* 5,670 23% 4,599 3,974 3,250 2,615 21%

Net profit* 628 41% 447 438 340 259 25%

No. of stores 2,244 322 1,922 1,558 1,284 1,080

No. of countries 56 8 48 44 39 33

International sales 55% 54% 54% 54% 52%

Employees 47,046 39,760 32,535 26,724 24,004

Main indicators

*in millions of euros

Although all the sales formats have individual characteristics as faras target audience, business lines or store design are concerned,all the chains have one characteristic in common: fashion with anemphasis on design, aimed at meeting customer demands and atattractive prices.

At the end of FY2004, Inditex owned 2,244 stores in 56 countriesin Europe, America, the Asia-Pacific Region, the Middle East, andAfrica. During the year, Inditex increased its number of stores by322 and began trading in Hungary, Romania, Estonia, Latvia,Lithuania, Hong Kong, Morocco and Panama.

The vast majority of the Groups sales 82.8%- take place inEurope, both in terms of weighting in the home market (repre-senting 45.5% of sales) and the total number of stores (1,943stores, 86.6% of the total are present in European markets). Thisregion has also seen the highest growth in terms of sales outletsover recent years. Indeed, in 2004 the 91% of new stores (293)-were opened in Europe.

Inditex sales formats grow largely due toopening stores managed by companies inwhich Inditex is the sole or the main share-holder. As at 31 January 2005, 88.3% of storeswere company-managed and represented 90%of the total sales.

Inditexs business model is characterised by ahigh degree of vertical integration. Inditex isinvolved in all the stages of the fashion process:design, manufacture, logistics and distributionto its own stores. It has a flexible structure anda strong customer focus in all its businessareas.

Part of the production process takes place inthe Groups own factories in Galicia and the restis manufactured by external suppliers. 70% ofproduction comes from Europe and thesurrounding area, the rest coming from Asiaand, to a lesser degree, from other countriesaround the world. The closeness factor isextremely important given the structure of theGroups offer, which is targeted at highlyfashionable garments.

Production, regardless of its origin, is receivedat the logistics centres of each chain, fromwhere it is distributed simultaneously to all thestores worldwide on a highly frequent andconstant basis.

Inditex is the leader of a group of fashion

distributors. In 2004, it brought in a consoli-

dated turnover of 5,670 millions of euros and

net profit of 628 million euros. Inditex has been

listed on the Stock Exchange since 2001 and is

one of the largest companies in the world in its

industry.

Narn A CoruaPull and Bear head officePull and Bear logistics centreIndipunt (knitwear)

Sallent de Llobregat BarcelonaStradivarius head officeStradivarius logistics centre

Arteixo A CoruaInditex head officeZara, Zara Home and KiddysClass head officeZara and Kiddys Class logisticscentreProduction centres

ZaragozaZara logistics centre

Tordera BarcelonaMassimo Dutti, Bershka and Oyshohead officeMassimo Dutti, Bershka and Oyshologistics centre

Elche - AlicanteTempe head officeTempe logistics centre (footwear)

The Groups main business centres in Spain

45.5%Spain

6.7%Rest world

2004

10.5%America

2004

37.3%Rest Europe

Zara

Kiddy's Class

Pull and Bear

Massimo Dutti

Bershka

Stradivarius

Oysho

Zara Home

65.8 34.2

12.8 87.2

30.2 69.8

41.9 58.1

35.7 64.3

15.4 84.6

31.5 68.5

12.7 87.3

NacionalInternacional

Oysho 1.3 %

Zara Home 0.7 %

Bershka 9.1 %

Stradivarius 4.3 %

Zara 67.4 %

Massimo Dutti 8.5 %

Pull and Bear 6.7 %

Kiddys Class 2.1 %

2004

Percentage of sales in international / national stores per chain

Sales by chain

Sales per geographic area

New York. USA, 15 december 2004Milan. Italy, 15 december 2004So Paulo. Brazil, 15 december 2004

We adapt our global fashion concept to eachdifferent market

1 Businessprof

ile| 2

Shar

ehol

ders

| 3Cu

stom

ers

7 Environmentl 8 Ec

onomy

| 9Go

odGo

vern

ance

4 Employees |5 Su

ppliers

| 6So

ciety

1

04_1 Our shareholders 04_2 Communication channels 04_3 Share propers

04_0 Shareholders

Our aim is to provide them with information that is clear, detailed and complete enough to evaluate the Groupsmanagement and its economic and financial results.

Transparency and active communicationwith our shareholders, is one of our basic operating principles.

14 Sustainability Report INDITEX SHAREHOLDERS 15


At the end of the financial year, Inditex had a

total of 88,484 shareholders, of which 84,771

are individuals, and the rest institutions. During

FY2004, Inditex changed its regulations for the

General Shareholders Meeting in order to

withdraw the requirement of holding a

minimum of 50 shares in order to attend the

meeting. Retributions for shareholders via

dividends has increased by 150%. The organi-

zation has set itself the objective of increasing

shareholder dividends from 35% of profits in

2004, to reaching 60% of profits in 2008.

1 Business profile

| 2Share

holders |

3Cu

stom

ers

7 Environmentl 8 Ec

onomy

| 9Go

odGo

vern

ance

4 Employees |5 Su

ppliers

| 6So

ciety

1

>> >>

3,713

84,771

Individuals shareholders

Institutionals shareholders

Individuals

Institutions

Board of Directors

32.60%7.50 %

59.90 %

Shareholder breakdownDistribution of share capital according to number of shares

Shareholders Shares

Individuals 46,717,257Institutions 203,114,730Board of Directors 373,498,413

Total 623,330,400

04_1 Our shareholders 04_2 Channels of communication

Shareholders office

Any private investor is free to visit the Shareholders office toobtain detailed information about the development of businessand future strategies. Through this channel, the 84,000individual shareholders may issue any request for informationthey consider relevant concerning the growth of INDITEX.

The Shareholders Office is particular relevant when calling andholding the General Shareholders Meeting, traditionally held inmid-July at Inditex head office in Arteixo (A Corua). Preciseinformation and documentation is sent to provide shareholderswith sufficient details on the meeting and the contents to bediscussed, as well as facilitating their participation in thedecision-making process of the main governing body.

Shareholders e-mail address: [email protected] direct line: +34 901 33 02 12

Website

The corporate website includes all of therelevant information necessary forShareholders and Investors, and is aimedat being a method of communication withshareholders, offering them up to dateinformation on all of the significant aspectsof their interest.

The new Regulations of the Board ofDirectors includes an expressed regulationon the corporate website, detailing theminimum documentation and information itmust contain. Also in FY2004, thecorporate website was adapted to complywith the requirements on structure andinformation detailed in Spanish Law26/2003 dated 27 July (Law onTransparency) and in Bulletin 1/2004dated17 March from the Spanish NationalStock Market Commission.

Any user entering the corporate websitemay obtain information on daily andhistorical share prices, public yearly reportspublished by Inditex since 1998, allfinancial information sent to the StockMarket Commission via Regular PublicInformation, all relevant information sent tothe Stock Market Commission, its board ofdirectors and the financial calendar,amongst others.

During 2004 the section on Information forShareholders and Investors of the corporatewebsite (www.inditex.com) received a totalof 384,254 hits.

Apart from the corporate website,www.inditex.com, each of Inditexs tradingcompanies has its own website:

The corporate website has been adapted to the Transparency Guidelines

www.inditex.com

www.zara.com www.pullandbear.comwww.massimodutti.com www.bershka.com

www.e-stradivarius.comwww.oysho.com www.zarahome.com

88,484 Shareholders


Investor Relations Department

< 43 financial and stock market bodiespublish analytical reports on Inditex shares.We are the third Spanish company in termsof coverage

< More than 3,700 institutional share-holders, owning 32.6% of the capital, playa key role in setting share prices and theirliquidity.

In 2004 some 500 meetings wereheld with investors, analysts andinvestors specialized in CorporateSocial Responsibility.

Relevant information about the growth and developmentof Inditex is also provided on a quarterly basis from theCNMV (Spanish Stock Market Commission) to the share-holders as a whole, to the financial community and themedia, both in Spain and abroad, paying special attentionto the economic media. This relevant information includesthe Balance Sheet, Profit and Loss Accounts andManagement Report.

This same procedure is used with information on relevantevents that affect the development of business. Thiscorporate information is available immediately via thecompanys website, and is distributed to a database ofinvestors and analysts with more than 1,100 entries.

In the area of institutional investors, Inditex completes thisinformation with quarterly, freely accessible multiconfer-ences via internet and over the telephone, in order toexplain the quarterly results.

Other important events are the Presentations of YearlyResults to Analysts and Investors, held in London andMadrid, before an audience of some 60 people.

Further presentations are made in the main financialcapitals and at visits to the installations.

Article 41 of the Regulations of the Board of Directorsestablishes a series of measures that govern relations withshareholders.

In 2005 special efforts have been made within themarkets to explain the impact of transition to IFRS (withpresentations in London and Madrid on 12 May), as wellas to explain the Groups initiatives in the area ofCorporate Social Responsibility.

Activities with Institutional Investors

a) RoadshowsEvery year the Board of Directors offers a series ofpresentations or roadshows at which it presents theresults from the first two quarters (Spring-Summerseasons) and for the full financial year (after the Winterseason), visiting the worlds main financial capitals. Overtwo and a half weeks, the main investors have access tothe strategic perspective of the management team, mainlythrough individual meetings. These visits have been usedto establish direct contact with more than 200 investors.

b) Sectorial conferences Another forum for communication with investors are thesectorial conferences organized by financial institutions,taking part at the main events held throughout Europe,with an average attendance of 50 of the main institutionalinvestors at each.

c) One-to-one meetingsApart from the programmed events, a further extensiveseries of individual meetings are organized with investorsevery year. In the case of specific demands, visits areorganized with investors to a specific country or region. Inthe last year presentations were offered in Europes mainfinancial centres, with more than 100 institutionalinvestors.

d) Visits by Investors to the companys premises A large number of visits were also made by institutionalinvestors to Inditex installations to provide them with moredetailed knowledge of our organization, its businessmodel and corporate strategy. Throughout FY2004meetings were held in different locations with more than150 institutional investors from all over the world.

Inditex shares are currently listed on the four Spanishstock exchange indexes through the MercadoContnuo or Continuous Market. It is listed on theIbex 35 index of the Madrid Stock Exchange, on theMSCI Euro, DJ Euro Stoxx and the FTSE Eurotop 300.

Inditex is present in the main stock market indexesthat measure the commitment of companies in termsof Corporate Social Responsibility: the Dow JonesSustainability Indexes and the FTSE4Good.

In the evaluation carried out by SAM (SustainabilityAsset Management), a body that evaluates theeconomic, social and environmental indicators ofcompanies in order for them to be listed on the DowJones Sustainability Indexes, Inditex obtained aboveaverage results for all of the criteria analyzed.

04_3 Progress of shares FY2004

Appreciation of shares on IBEX 35 from launch onstock exchange (23 May 2001) to 31/1/05: 54.21%.

Over FY2004 Inditex sharesappreciated by 38.7%,compared to the appreciationof the IBEX 35 index of16.3%.

Trends of share price 2004(in euros)

13,538 Million Euros of market capitalization (as of 31 January 2005)

IBEX 35

INDITEX

60

80

Index 100*

120

140

31/01/04 31/01/0502/04 03/04 04/04 05/04 06/04 07/04 08/04 09/04 10/04 11/04 12/04

Annual trends Inditex vs. IBEX 35

* Value at 31st. January 2004

38.7%Variation 04/03

47.7%Variation since initial value

21.7231 January 2005

15.6631 January 2004

21.7231 January 2005

14.7023 May 2001

Sustainability Report INDITEX CUSTOMERS 2120

05_1 Our commitment05_2 Customer relations model

05_0 Customers

to anticipate their needs, improving the products and services we offer.

We listen to our customers

22 Sustainability Report INDITEX CUSTOMERS 23

We work to improve each of the critical factorsthat define our business: fashion, quality,design and price, to keep strengthening ourcostumersconfidence in our products, andguaranteeing the satisfaction of everyone whoshares our outlook on fashion. Thanks to them,

we have grown. Our stores are increasinglylarger, and extended across more countries. Welaunch new products and extend our services.We listen to their suggestions and adapt ouroffer according to their needs.

05_1 Our commitments

In response to the concerns of

many of our customers all over the

world regarding the use of fur in

garments, Inditex has decided to

eliminate it from its products in all

the world.

This measure was fully effective in

100% of our stores from January

2005, and since 22nd September

2004 in Canada, USA, UK, Ireland,

France, Belgium, Holland,

Luxembourg, Germany, Austria,

Switzerland, Italy, Sweden, Norway,

Denmark, Finland, Iceland, the

Czech Republic, Poland and

Slovenia.

Inditex has adopted a full commitment in all of the areas of customers service. Acommitment based on two main principles that guide our activities.

Actions 2004

Action guidelines

FlexibilityWe adapt to our customersexpectations

Fashion, despite being a global culturalexpression, has an essential component ofindividual choice. Inditex proposes a widerange of options, so that it is the customerwho makes their own decision, accordingto their tastes and desires.

Personal customerservicethat guarantees full satisfaction

Sales do not end with the exchange of aproduct or service between business andcustomer. Visiting one of our stores mustbe in itself a satisfactory experience.

People are one of the most importantfactor in acheiving this goal.

We listen toour customers

and create new productsand services

We are responsible

We have eliminated

fur products fromour stores

In 2004 Massimo Duttiincorporated the possibilityof men having their suitsmade to measure. Aninitiative that added evenmore value to the highquality of the suits sold bythe chain, designed forcustomers seeking a moreexclusive product.

We launchPersonal

Tailoring, anew personalized

fitting service

We showconcern

for ourcustomers

We continue to makeadvances in the certificationprogramme using the Oeko-tex Standard 100Certification. In this periodwe have achieved 24% ofcertified product forgarments for 0 to 16 yearsof age, guaranteeing theabsence of harmfulsubstances throughout all ofthe production process.

We continueworking on the Oeko-tex

certification

We keepimproving tooffer you the

very bestservice

We train all of our storeteams in Customer Service.An awareness campaignchannelled via the internalmagazine, and which hashad the support of theteams from the sales andmarketing network, byoffering different trainingactivities throughout theyear.

CustomerService

MinimumsCampaign

1 Business Profile

| 2Sh

areho

lder

s| 3

Custom

ers

7 Environmentl 8 Ec

onomy

| 9Go

odGo

vern

ance

4 Employees |5 Su

ppliers

| 6So

ciety

1

Origin of e-mails received in 2004: 49,305

0

2000

4000

6000

8000

10000

12000

14000

16000 15,678I

I Inditex | Z Zara | PB Pull and Bear | MD Massimo DuttiBSK Bershka | STR Stradivarius | OYS Oysho | ZH Zara Home

10,539Z

6,294

MD

1,947PB

1,435OYS

11,350

BSK

1,405ZH

6,57STR

24 Sustainability Report INDITEX CUSTOMERS 25

In 2004 we re-designed our corporate

website, reaffirming our commitment

towards offering transparent information by

improving access to its contents, using a

more intuitive design that meets the most

demanding international standards in terms

of navigability, accessibility and visual

design.

Both the corporate website of the Group

and those of the different chains are useful

tools to help provide our customers with

information.

The different chains that belong to the

Inditex group have a range of channels

open to the public to deal with any request

for information, suggestions or complaints

they may have. Apart from the

personalized service offered in our stores,

the group has a series of suggestion forms

available for the public. There are also

telephone helplines and e-mail services,

available via the websites of each chain.

All of the Groups websites make it

possible to contact the other chains or

head offices using a form. In 2004 a

total of 49,305 forms were received in

this way, all of which were answered

personally.

In the case of Zara, the chain which

represents the largest turnover, out of a

total of 10,539 forms received, 53.44%

referred specifically to customer service

matters. Of these, 41.2% (2.324)

referred to queries or circumstances

directly in relation to the attention

received in the store, with the remaining

58.8% being requests for a wide range

of information.

All suggestions or complaints are dealt with

initially by the store managers and their team.

The priority in this case is to offer a correct

solution in the most agile manner possible,

without turning to other procedures that delay

the process. In any event, the customer

always has the opportunity if they consider

it necessary to contact the Customer

Attention Department, which is responsible

for receiving, evaluating and responding to

the requests our customers pass on to us

directly.

Our customer relations model isfocused on the point of sale, wherethe store team is the main nucleusof customer attention.

This Department may be contacted on a

Customer Attention freefone number in Spain

(900 400 323); via the general telephone

number of the Companys central services

(+34 981 185 400); from all of our stores; by

mail or e-mail, with the address listed on all

of the different corporate websites.

In 2004, the Customer Service Department

dealt with more than 3,600 calls directly,

representing a monthly average of more than

300 calls. This is a very low number if we

consider the large number of products sold in

Zara stores throughout Spain (94.3 million

items). This low ratio is the result of the

model for customer relations focused on the

point of sale, with the store team serving as

the main nucleus of public attention.

The Inditex Groups way of understanding the fashion business situates the store asthe central hub of our activity. Our store staff receive full training in customer serviceas an essential value. Store managers are responsible for leading their sales team asrepresentatives of the values, reputation and image of the Company. The comfort ofcustomers and their freedom to choose are the essential principles of our activity. Thecustomer may remain as long as they wish in our store, discovering more about theitems on offer and coming into direct contact with the product.

Throughout 2004 our websites received atotal of 12,015,327 hits, 3,704,993 morethan in the previous year. Zaras websitecontinued to be the most visited whichrepresented 67.1% of the total.

Both the design and product offered by Zara, thechain that represents 67.4% of the Groups totalsales, continue to be the elements most highlyvalued by its customers.

In 2004, The Customer Service Departmentdealt with more than 3,600 calls, giving adirect, personalized response to all of them.

Direct, open relationshipThe model for customer attention at stores belongingto the Inditex Group is essentially focused onestablishing an open, direct relationship.

Freedom to chooseThe store is a dynamic, ever-changing environment.Customers visiting any of our stores who are interestedin the fashion items we offer enjoy absolute freedom intheir contact with the product.

Personalized service The store team is fully available at all times, althoughwithout interfering in customers choosing and buyingitems if not requested to do so.

Customer satisfaction

Customers choose Zara based on...

+ closer+ quality+ services+ solutions

www.inditex.comwww.zara.comwww.pullandbear.comwww.massimodutti.comwww.bershka.comwww.e-stradivarius.comwww.oysho.comwww.zarahome.com

we are more accesible we listen we focus on solutions

Hits on websites: comparison 03/04

2004

2003

TOTAL 12,015,327

I 1,002,677

Z 8,063,628

PB 594,457

MD 676,084

BSK 794,779

STR 408,820OYS 1 69,719Z H 209,755

Z 5,612,396

PB 415,025MD 430,357BSK 543,26STR 264,917OYS 119,402Z H 79,333

I 845,638

The store as the centre of our activities

05 _2 Customer relations model

Product/design

Customer attention

Quality and price

32.24%

38.43%

17.45%

11.88%Others

8%

12%

60%

1st option 2nd option

20%


0

2000

4000

6000

8000

10000

12000

14000

16000 15,678I


10,539Z

6,294

MD

1,947PB

1,435OYS

11,350

BSK

1,405ZH

6,57STR


0

2000

4000

6000

8000

10000

12000

14000

16000 15,678I


10,539Z

6,294

MD

1,947PB

1,435OYS

11,350

BSK

1,405ZH

6,57STR

49,305 contact forms received. In the case of Zara, 42.2% of the queriesreferred to the attention received in our stores.

The main objective of

personalized service in a sales

outlet is customer satisfaction.

The managers of our sales

outlets, supported by their team,

are responsible for offering a fast

and efficient response to their

customers demands, again

regardless of whether they buy

our products or not.

Sustainability Report INDITEX EMPLOYEES 2726

06_1 Our people 06_2 Our objectives, policies and activities

06_0 Employees

An enthusiastic team is a guarantee for our growth.Developing channels for promotion and building relationswith our employees based on confidence and innovation isour responsibility.

We grow alongside the peoplein our team.

28 Sustainability Report INDITEX EMPLOYEES 29

Inditex employs 47,046 people in30 countries, 7,867 more thanlast year. The characteristics ofour staff are in line with thecharacteristics of our business:young people the average age is26 years-, who have beenworking for the company for lessthan three years this year wehave opened 332 new stores-and a female majority in all ofour organisations areas, with theexception of logistics wherefemale employees represent41%-. Females hold 54% of themanagerial, technical andadministration posts and theyalso represent 82% of shopmanagers.

The head offices of Inditex andthe Groups chains, logisticscentres and factories are alllocated in Spain. This countryalso has the most stores (1,321)and employees (26,719). In theoverall ranking, Spain is followedby Portugal, France, Mexico,United Kingdom, Germany andGreece.

47,046 employees 20% more than in 2003 and we just keep on growing

Zara 68%

Sales activities: 88% Logstics: 5% Central Services: 3% Manufacturing: 4%

Our growth in staff is directly proportional to the opening ofnew stores.

In 30 of the 56 countries

Young people: Average age: 26 years old 83.5 % females / 16.5% males

The companys growth determines the principles ofour Human Resources policies. Launching newmarkets, quick decision-making, involvingemployees or always providing new solutions aresome of the current requirements set by the

organisation which we fulfil through targets and day-to-day tasks. Our corporate values and our way ofhandling people are decisive factors in developingthe organisation and ensuring that it goes fromstrength to strength.

Pull and Bear 7%

Massimo Dutti 6%

Stradivarius 5%

Logistics 5%

Central services 3%

Factories 4%

Oysho 2%

Zara Home 1%% store employees per chain

Total employees per activity

Kiddys Class 3%

Bershka 10%

Stores 88%

2004

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

16 453525 55 65

year 2004year 2003year 2002

who we are

what we doyoung people

88 % commercial activity

where we arein 30 countries

Evolution number of employees per activity and totall

0

10000

20000

30000

40000

50000

2000 2001 2002 2003 2004

logsticstotal stores central services and sites factories

attractselectin hiring

linkpromote professional growth

legal environment

social environment

06_1 Our people

internal communicationcompensation

risk preventionoccupational health

acknowledgementfringe benefits

+ motivate

Our objectives, policies and activities

training developmentinternal promotion

whowe are47,046 employees

31/1/05 31/1/04 growth% 03-04

The countries with the highest of employees

26,7193,4743,0171,8901,7521,3321,3261055

690640575499449436433370386340316291235139133112

99107

73695930

47,046

21.826.40

19.589.69

20.9114.33

7.0241.61

9.703.738.086.17

25.7727.8637.90

0.8262.18

423.080.96

53.1631.2837.62

9.921.82

94.554.29

666.6725.53

150.00

20,08

SpainPortugalFranceMexicoUnited KingdomGermanyGreciaItalyBelgiumVenezuelaTurkeyBrazilUnited StatesCanadaJapanChileHollandIrelandArgentinaSwitzerlandAustriaSweden DenmarkUruguayHungaryCzech RepublicLuxembourgChina & Hong KongPuerto RicoNorway

Total

21,9333,2652,5231,7231,4491,1651,239

74562961753247035734131436723865

313190179101121110

-5570

94712

39,179

1 Business profile

| 2Sh

areho

lder

s| 3

Cust

omer

s

7 Environment l 8Econ

omy |9 G

ood g

over

nanc

e4 Employees |

5 Suppl

iers| 6

Socie

ty

1

hiring


attract link

We aim to give the broadest nationaland international coverage to Inditexsjob offers in order to ensure thatcandidates have the fullest accesspossible, in accordance with theprinciples of non-discrimination andequal opportunities.Inditex publishes its job vacancies viatwo channels: the permanent andworld-wide job site, accessed throughthe Groups company websites, and themedia. In 2004, 225,000 candidatesfrom 56 different countries posted theirCV spontaneously on our job site, whichalready has more than half a millionactive users. This is the main databaseused in recruitment processes. 1,870job vacancies were published innewspapers and on the Internet.

In the selection processes, priority isgiven to employees in stores andlogistics centres or central services. Ifwe take Zara Espaa as an example,which is the company with the mostemployees, 34.5% of the newly-created posts have been filled byinternal promotion in stores and 43.5%in Central Services (sales and productareas). Internal promotion in the groupis based on an internal system ofpublishing vacancies and a programthat identifies potential.

In collaboration with prestigiousBusiness Schools from differentcountries, we have devised aprogram targeted at young peoplewith managerial potential whobecome involved different areasand projects in our organisationand follow an individual careerplan.

we create agreat team

In collaboration with prestigiousBusiness Schools from differentcountries, we have devised a programtargeted at young people withmanagerial potential who becomeinvolved different areas and projectsin our organisation and follow anindividual career plan.

we have flexiblejob offers

Our international expansion policythat prompted us to open 8 newmarkets in 2004 has also led to thecreation of multinational businessmanagement teams. At the headoffices of the chains and of theInditex Group in Spain there areemployees with 27 differentnationalities. Their point of viewbrings us closer us to the culturalvalues of each region.

we createmultinational

management teams

As part of our internationalexpansion policy, we entrustmanagement to professionalsfrom each of the countries inwhich we carry out our businessactivities. This is because theyare familiar with the market,customers and the local cultureand values, and we trust in themto adapt our business model andcorporate values accordingly.

we emplylocal

professionals

We increase stable hiring levelseach year. Whereas in 2004 netemployment growth was 20%,permanent contracts rose by 24.9 %. This year we have created25,000 long-term contracts.

we promotestable

employment

we take onyoung

professionalswith strong

managerialpotential

more than halfof our store manager positionscome from promotins

we givepriority to our

employeesfor promotion

225.000new candidates

70%of employees

have a long-termcontract

06_2 Our objectives, policies and activities

hiring

recruitmentrecruitment

compensationcompensation

hazards and safetyhazards and safety


motivate+promote professional growth

Specific programs in 27 countriesHelping the business to spottalent among its employees is anongoing objective of the HumanResources teams. This year,talent-spotting programs havebeen introduced in 27 out of 30countries. 23.4% of theparticipants have been given aninternal promotion and 54.2% arefollowing an individual trainingplan.This program aims to developknowledge and skills andestablishes a tracking system andcareer plan.

we identifyemployees withpotential

Our internal magazine (IN) allowsemployees around the world to keepabreast of the business and it bringsthem closer to our philosophy andvalues. It is a means of informing,advertising and raising awareness.Four issues were brought out in 2004.There has been an increase inemployee participation andinternational content.

we informon a

continuousbasis

This is one of Inditexs main valuesand a factor of the managementmodel. The non-hierarchical structureand the focus of the people guaranteedirect and almost daily contact withemployees and the constantexchange of opinions.

we encourageopen and directcommunication

Taking a global approach, we useseveral Internet-basedcommunication systems tocommunicate with the employees ofthe central services of the chainsand of Inditex in Spain and thebranches of our subsidiaries. Thesetwo interactive applicationsInditexnet and Gesdoc- allowinformation to be exchanged andresources to be optimised promotingthe awarenses of organizationalchange.

we incorporateinteractive

communication systems

During the course of 2004,communication campaigns weredeveloped to involve employees in theorganisations objectives in terms of:

_Customer service (advertisingcampaign with the minimum customerservice requirements in the internalmagazine)

_Environment (choosing the corporatemascots name using the magazineand Intranet).

_Solidarity (promoting corporateactivities using the magazine)

_Sales promotion (customer debitcards, presenting collections,)

_Health and safety

we launchparticipation and

awarenesscampaings

Our compensation policies aim toprovide employees with incentivesand recognise their contribution to thebusiness. Variable pay is present in allsales duties (86% of all employees)All the managers and supervisors ofan area or duty participate in themanagement by objectives system.

we adaptfinancial reward

to different employee groups and

countries

Looking after the health and safety ofemployees is our priority. This yearsobjective has been to consolidate theHealth Supervision area with externalresources by developing specificprotocols per risk and task. Thereare two main actions: setting upemergency plans and training thestaff of Inditex, the chains and thelogistic centres in Spain.

we guarantee asafe

environment

Over and above the actionsrecommended by legal regulations inforce, we promote the improvement ofinstallations and working conditionsand we carry out health promotioncampaigns. This year an ergonomicstudy has been conducted on thegroups factories for all posts andspecific campaigns for differentgroups. Campaigns for participation inmedical examinations, giving upsmoking or donating blood have beenposted in all work centres.

we promotehealth

campaigns

We use two indicators to analyse theresults of health and safetycampaigns: the absenteeism andaccident rates.Although the workforce has increasedby 21%, absenteeism has dropped by7.6% (hours lost/hours in contract)and the occupational accident rate by1.8% (no. of processes/no. of hoursworked x 100).

we reduceabsenteeism and

accidents

All the countries have introducedthe customer service trainingprogram, which is aimed atconsolidating one of the factors ofour business. Sales managementhas been intensely involved in thetracking of the program.

focuson customer

service

We continue to develop ongoingtraining actions for all job profiles(shop assistants, cashiers, windowdressers, manual workers, salesreps, etc), for all activities (logistics,stores, sales) and in a wide rangeof subject matters, both job-specificand general languages, computerskills, accountancy, etc.-. Thechallenge is to improveemployability in order to encourageinternal promotion.

we provideongoing training

we combine differentlearningmethods

Our training activities areessentially practical. Weincorporate new methods toachieve maximum employeeparticipation, such as BlendLearning. All logistics and centralservices employees receivelanguage and computer trainingby using the Blend Learningmethod which combines theadvantages of e-learning with acomputer and at ones own pace,and with direct, personal tutors.

we promotefunctional mobility

Knowing the business and face-to-face customer contact throughworking in the stores has been thepurpose of a highly ambitioustraining project during which all themanagers of the Zara logisticscentres became shop assistants forone week and learnt about otherareas of the organisation. Thisexperience was extremely useful,leading to changes in workprocesses and giving the chance toacknowledge other peoples jobs.

we adaptcompensation to the

bussines

Due to more sales outlets andbroader geographical coverage,the sales network in contact withstores has expanded, and aproximity organisation model hasbeen set up with moreresources. Permanent contactwith shop assistants is one of thefunctions of this model.

specific programs in

27 countries

allzara employees around the world

have completed their training

210.000hours this year

the logistics managers

are trainedin stores

personalcontact

model

trainingtraining

developmentdevelopment

internal communicationinternal communication

health an safetyhealth and safetypromotionpromotion

Our compensation policies aim toprovide employees with incentives andrecognise their contribution to thebusiness. Variable pay is present in allsales duties (86% of all employees) Allthe managers and supervisors of anarea or duty participate in themanagement by objectives system.

we adaptcompensation

to business


attract link promote professional growth + motivate

This year we have made an effort toimprove our personal data managementsystems to guarantee the fulfilment oflegal requirements and cultural factorsin all the countries in which the Groupis present, adapting the recruitmenttools to these requirements.

protecting candidate

data

For stores of several chains that areopened in the same shoppingcentre, we centralise therecruitment process so as to extendthe offer to job-seekers. We workwith local agencies employmentagencies, organisations andinstitutions, thereby promotingemployment and local development.

The right to freedom of associationis respected, with employeesencouraged to participate inaccordance with the legislation ofeach country.In Spain there are employeerepresentation bodies in almost allcompanies and provinces. Thereare a total of 406 representativesincluding works committees,employee representatives and tradeunion representatives. In 2004, the majority of theemployee representation bodieswere re-elected in trade unionelections.

freedom ofassociation

In order to encourage internationalexpansion, we use a developmentprogram for young people withmanagerial potential, incollaboration with Business Schoolsfrom different countries. Theseprofessionals join our organisationand follow an individual trainingprogram.Likewise, we build up relationshipswith international Fashion Designschools and centres that awardqualifications similar to ourbusiness profiles. We collaborate inthe teaching activity, makecompany presentations and employrecent graduates in our companies.

we build uprelationships

witheducational

centres

We develop teaching activities atthe training schools near our storesand take on students on workexperience. This year, in Spainalone, 822 students took part inthe program. This has been anopportunity for them to gain accessto their first job.

we provide students

with their first professionalexperiencie

throughtrainee

programmes

Regardless of the usualcollective bargainingprocesses, participation anddialogue processes are alsoheld with both the employeerepresentation bodies in thecompany and with the mostrepresentative Trade Unions onan institutional level.

institutionaland

internationalrelationships

Employees from all over the world are covered bycollective bargaining processes. In Spain, the provincial Collective Agreements applyin the branch of trade, and manufacturers arecovered by the General Collective Agreement for theTextiles and Clothing Industry.In Spain for all factory workers an agreement hasbeen signed with the communist labour unionComisiones Obreras, in which, apart from bettereconomic conditions than those established in theAgreement, fringe benefits are introduced. In the Logistics sector, three Agreements have beensigned with the Works Committees of Zara Logstica(Arteixo), Pull and Bear (Narn) and PlataformaEuropa (Zaragoza), which lay down considerablybetter labour conditions than those established in theapplicable provincial Collective Agreements.Listening to employees through the organisationsopen, permanent channels and anticipatingexpectations and needs prevents any disputes.

socialdialogue

In Spain we have a Joint PreventionService, which meets legal regulations.This service covers Occupational Healthand Safety, Industrial Hygiene,Psychosociology and Ergonomics. Theorganisation establishes therelationships with the workersrepresentatives in accordance with thefrequency and requirements set bySpanish Law.

hazardsand safety

legislation

legal environment

social contributionwe promote

localemployements

07_1 Our social Responsibility model 07_2 Programmes for checking the degree of Compliance with the Code of

Conduct for External Manufacturers and Workshops 07_3 Internal and External Social Capital Creation programmes

07_0 Suppliers

with a Code of Conduct that guarantees dignified workingconditions. We have completed more than 2,600independent audits in factories in more than 30 countries.

We are committed to our suppliers and employees

36 Sustainability Report INDITEX SUPPLIERS 37

38 Sustainability Report INDITEX SUPPLIERS 39

Inditex has a wide network of external suppliersaround the world, who act as business partners bycontributing towards the sustained growth of theorganization. From the standpoint of shared respon-sibility and participation, Inditex designs, developsand supervises different programmes aimed atsupporting and helping these collectives, andrequires full respect for Human Rights in all of theirproduction centres, whether factories or workshops.These are the production chain strengtheningprograms. These programmes include actions in thefactories of the suppliers and through the social andeconomic development of the communities in whichtheir employees and families live.

Group production per geographic area (units)

1 Business profile

| 2Sh

areho

lder

s| 3

Cust

omer

s

7 Environmentl 8 Ec

onomy

| 9Go

odGo

vern

ance

4 Employees |5 Su

ppliers |6 S

ociet

y

1

European Union 59%

Latin America 3%

Asia 23%

Non-EU Europe 12%

North Africa 3%

Production chain strengthening programmes

We believe that being citizens of theworld implies working actively towardsthe respect and progress of HumanRights, as defined in the principalconventions of the United Nations.

We help our suppliers to implementInditexs Code of Conduct for ExternalSuppliers and Workshops. We demandtheir dedication and regularly verify theirlevel of compliance using independentinspectors, following the guidelinesdefined by international standards.

We believe that the process of implantingthese Codes of Conduct has given us theopportunity to make changes that haveimproved social and working conditionsboth inside and outside of our suppliersfactories.

We believe that intervention should notbe limited to our suppliers factories, butthat we should also include the commu-nities in which they are based, in orderto transmit and encourage values ofsolidarity, respect and good citizenship

We believe that by working together distributors, manufacturers and socialand trade union organizations by devel-oping common platforms of standardi-zation for pan-European Codes ofConduct, such as the Business SocialCompliance Initiative (BSCI), we have theopportunity to develop an awareness thatallows us to produce and at the sametime consume goods and services,without this process having a negativeeffect on other people or environments.

07_1 Our Social Responsibility model

Spain, Portugal, France, United

Kingdom, Italy, Greece

Romania, Turkey, Lithuania,

Bulgaria

Morocco, Tunisia

China, India, Bangladesh,

Thailand, Cambodia, Vietnam,

Pakistan, Indonesia, Sri lanka,

South Korea

Mexico, Peru, Venezuela,

Brazil, Argentina

sustainability report

Documents

inditex format

model of responsibility

patronage programmes

social commitment08

social regulations

social actionprograms

organisation ofwhich

external social capital