By Saabira Chaudhuri 

Zara-owner Inditex SA plans to elevate its chief operations officer to be its next chief executive, a management change the world's largest fashion chain said would help it focus on enhancing its digital capabilities.

The company said it is proposing 48-year-old Carlos Crespo as its new CEO, replacing Pablo Isla, who currently holds the joint role of CEO and executive chairman. Mr. Isla, 55, will stay on as chairman, and Mr. Crespo will report to him. Both appointments need to be approved by Inditex's board following a July shareholder meeting.

Mr. Crespo will focus on technology -- including security -- logistics and transportation, construction, legal, procurement and sustainability. He and Mr. Isla will together set business strategy, according to a statement from Inditex.

Mr. Crespo has worked for Inditex since 2001, starting in accounting, moving to inventory management and eventually working his way up to COO. He has been involved in honing Zara's online strategy, which uses thousands of its stores as pickup and return points for online customers.

Inditex came late to online shopping, but it has won praise for stitching together its stores and online operations. Mr. Isla has said being slow to embrace digital sales ended up helping the company, allowing it time to develop a business model that has positioned it more strongly than it otherwise would have been.

Last year, the company said all its stores would be integrated with its online platform by 2020.The company makes many products in Portugal and Spain, where it has also based various brand headquarters and logistics facilities, giving it what admirers say is an edge over rivals because of the speed with which new products hit stores.

Lately though, Inditex -- whose brands also include Massimo Dutti and Pull&Bear -- has faced heightened challenges maintaining sales growth momentum and competing with online-only apparel retailers, such as Germany's Zalando SE and the U.K.'s ASOS PLC that sell a variety of brands. Like much of the retail industry, Stagnant profit margins have also alarmed some analysts, who say rising distribution-related costs are capping growth.

A spokesman for Inditex described Mr. Crespo as "Pablo Isla's right-hand man." He said a board seat is a way to recognize Mr. Crespo's contribution while also adding more experience in digital and sustainability to the board.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

May 23, 2019 13:32 ET (17:32 GMT)