Tuesday, April 12, 2011

Oh Mickey, You Are Something! ;)

Bloomberg has an article on J.Crew's CEO Mickey Drexler and the recent buyout of J.Crew (click here to read in its entirety):
J.Crew CEO Drexler Says He Would Do TPG Takeover Same Way Again
By Margaret Brennan and Cecile Vannucci
April 12, 2011

J.Crew Group Inc. Chief Executive Officer Millard Drexler said he wouldn’t change any of his behavior leading up to the sale of the retailer last month, after his conduct prompted investor lawsuits and criticism.

“I would do it the same way,” Drexler said in an interview for “InBusiness with Margaret Brennan,” which will air today. “I sleep well at night.”

J.Crew shareholders on March 1 voted in favor of a takeover by TPG Capital and Leonard Green & Partners LP, which offered $43.50 a share in November, valuing New York-based J.Crew at about $3 billion. The deal came after some investors sued Drexler, 66, accusing him of diluting the offer price by refusing to work with anyone but Fort Worth, Texas-based TPG, blocking other suitors from sweeping in with a better price.

J.Crew, which more than doubled its revenue since Drexler came from Gap Inc. (GPS) in 2003, now plans to expand outside the U.S. for the first time to boost sales. The chain, which operates more than 300 locations in the U.S., will open its first international store this summer in Canada.

“We’re looking at international, frankly, because the demand is there,” Drexler said. “We are an American brand, but I find most brands today are actually worldwide.”

The CEO also said the retailer is expanding its men’s business because it is “exceeding our plans.” J.Crew has about six men’s stores, he said. With the sale, J.Crew is becoming a private company that will make running the retailer easier, Drexler said. Before the deal, the retailer reduced its profit forecast at least twice in 2010, and Drexler had to explain the reasons for that to analysts and investors. With a private company, now he can focus on the long-term goals, he said.

...Drexler, 66, signed another employment contract with J.Crew that will keep him with the company until age 70, and he said he’s working on a succession plan of his own. Jenna Lyons, J.Crew’s president and creative director, could be a potential successor. “How could you say no, right,” he said.
What, what, what are you thinking Mickey? Let me begin by stating that I really like Mickey Drexler. However, his deal for J.Crew to go private was s-h-a-d-y. Shady. So for him to say that he regrets nothing and sleeps well at night, is a bit upsetting. In the end he got a great payday (& job security), but did the shareholders? When I first heard about the shenanigans surrounding the deal, I immediately sold my shares of J.Crew stock.

Onto better news... J.Crew going international! We have been hearing that J.Crew would move into Canada for awhile. Let's make this happen!

Let's talk succession... Could Jenna Lyons be the next CEO? She certainly is being groomed for the position. Interesting!

Mini-Update: There is a great video of Mickey Drexler being interviewed over at Bloomberg TV's InBusiness with Margaret Brennan. Interesting quotes:
On retail performance in an economic downturn:
"It's not the high tide right now. Although I looked at some of the numbers recently and there will be companies that always do well. And the companies that do well, by the way, I think are the ones that dominate categories. If you do it best, over the long term, you're going to drive more traffic to your business because they're going to find the best quality products in those categories. So when I mentioned the categories, it's just not put all the goods out there and hope for the best because a lot of people put the goods out there. And when we have a rough season, and we put the goods out, and we have a lot of markdowns. More and more markdowns drive people away from regular price in theory. That's why the investment aspect is so critical."

On international expansion of J. Crew:

"We're looking at international frankly, because the demand is there…We are an American brand, but I find most brands today are actually worldwide…We go to Canada in the fall. But we're looking at an online [business] actually even sooner than even with bricks and mortar because our online business is our most profitable business. And we just have huge demand overseas. So we're not running. We're walking, we're studying right now. But we launch the U.K. I think in August or September. That's kind of our official online international. Although we are in Japan left over from a deal we had. So we're starting to emphasize the Japanese too."
What are your thoughts on the article? Do you think Mickey has anything to regret for his moves to make J.Crew private? Are you excited about J.Crew's arrival to Canada & UK?


  1. I think J. Crew going private could possibly be good for the company from a quality standpoint. It seemed the quality went down starting when they went public as they whittled back a button flap here, a lining there to keeping leaping past the previous quarter. If you make a good profit from quarter to quarter, that may be good for your business, but not for a publicly held stock. I hope going private allows them to return to the quality of Fall 2004 and 2005.

    The way he did it? Not so much.

    Also, the reason men's is doing so well is because the men's line is so much better, so much more classic. I wish Frank had more influence over Jenna.

  2. I'm still curious if Crew Clothing Co. out of the UK will be an issue for J. Crew http://www.crewclothing.co.uk/

    Their clothes are very similar, their catalog is gorgeous and if I lived in the UK, I would be a huge customer of theirs. Will J. Crew avoid the UK?

  3. just because in the end he wasn't prosecuted doesn't mean he acted properly.

    Please don't tell me not to buy the clothes if I don't admire Dear Leader. I'm sure that if other manufacturers sought publicity as avidly and as constantly as Dear Leader does, I'd learn enough to wish that finer souls headed those companies also.

  4. PLEASE J. Crew, come to Europe. We can't ge anything right now, not even the catalogs.

  5. “We’re looking at international, frankly, because the demand is there,” Drexler said. “We are an American brand, but I find most brands today are actually worldwide.”

    A perfect example of how the company is so behind. Really...most brands are worldwide? You're just now learning or accepting that? A little bit late to the party. I agree w/WFF, if I knew more about the upper brass at many companies it probably wouldn't be any prettier.

    Can't wait till you discover how most brands have a current website! Maybe you'll join *that* party.

  6. Of course he sleeps at night. He's got financial security for himself and his next 10 generations!

  7. Ain't he somethin' else?

    It will be verrrrrrrrrrry interesting to see how the next 12-24 months play out, especially internationally. They need to build a damn warehouse in Canada, because cross-border shipping charges are just outrageous.

  8. Glad DL got his retirement paid for. Hopefully he can now concentrate on turning out product that is high quality, enduring, stylish, and worth our hard-earned money. Really hoping he does away with all the disposable clothing we're all sick and tired of. As for a B&M opening up in Canada? I cannot WAIT for the pricing discrepancies to continue, NAY, flourish! I for one am not totally excited about a JC opening up north of the border. BR, Gap, E Bauer all have stores up here, and sticker prices are regularly 20% higher than down south. Our exchange rate, which has been near par for over a year, means absolutely nothing to these people.

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  10. What a pompous ass. He sounds like he'd be perfect for to run on the Republican ticket in '12. Absolutely no concept of accountability, and a staggering sense of self-justification.

  11. Let's take a lesson from the previous post and try to avoid politics. And now back to J.Crew! :)

  12. It doesn't sound like he has any regrets, and he doesn't turn me off to the brand at all. If anything, I wish JCrew could produce more of Mickey's style instead of the latest fads. I like that he mentioned they over produced the ruffled shirts. By the way, there is a ruffle redux at Garnet Hill. Complete JCrew dejavu.

  13. More and more markdowns drive people away from regular price in theory.

    As Charlie likes to say, DERRRRRRRRRRRR!

    That remark in particular is extra rich considering the unprecedented markdowns we've seen over the last year!

  14. Barbabelle,

    "What a pompous ass. He sounds like he'd be perfect for to run on the Republican ticket in '12. Absolutely no concept of accountability, and a staggering sense of self-justification."

    Ummm, way to call him out. He's a known registered Democrat...LOL.

    So with absolutely no concept of accountability, and a staggering sense of self-justification, he'd be perfect for the the 2012 Democratic Ticket.

  15. I am an American living in London. This only thing I really miss about life in the US is J Crew. The Crew Clothing Co. IMO is nothing like US J Crew - it is more like basic Lands End or LL Bean. I am so excited about the prospect of ordering J Crew in the UK!!

  16. wouldn't MD be a perfect running mate for The Donald?

  17. WFF. Totally, let's just cross all party lines and take this country on Mr. Toad's Wild Ride.

    Enough politicking from me. Sorry Alexis!

  18. @Closet Crisis: As a fellow Cdn JCA, I'm SUPER excited for a B&M. And I doubt the shipping costs will be any worse than the mark ups, so we're netting equal I would say.

  19. @teensy84, true true, and being able to try on stuff would be a huge step up. Now, they just need to open one up on the west coast, and I'll be happy. No offense to the Torontonians, but TO is not the centre of the universe ;)

  20. In the EU we will be very excited just to be able to order. A B&M sounds like science fiction right now, but who knows, they may arrive.

  21. If I was in J Crew's PR Dept., I would try to keep MD away from the press because he is not doing himself or the company any favors with these interviews. He will be remembered forever more as the man who admires $800 umbrellas.

  22. Yay for the Canadian store!

    Boo that it's not in Vancouver! :|

  23. I agree with Elizabeth that the reason the men's line is doing so well is because it is so much better than the women's. Why oh why can't they let Frank design for us???

  24. Linda, Thanks for the feedback on Crew Clothing. I was curious and it seemed very similar. I requested their catalog last year and it was thick with heavy stock - left a good impression and the photos looked like old J. Crew; more classic than high fashion/ruffles.

  25. I agree, dinster -- he's gotten a little too big for his britches and he needs to think before he speaks, to consider what customers might think about his flippant attitude. I think sometimes people who came up through the ranks of traditional B&M retail tend to forget how informed consumers are now and how many ways we have of sharing information. Maybe 10 years ago we wouldn't even have known he made such comments. But things are so very different today.

    I admire what he's done; he's worked very hard to get where he is. But all his $$$$ is being made off of working people's backs and wallets -- he'd be wise to remember that.

  26. I don't think Mr. Drexler has anything to regret, because there's no oversight! The SEC is such a joke, it's crazy that Mr. Drexler can so brazenly say he doesn't regret breaking any rules but there are no consequences, so why not?

    The thing is, he's right. Taking the company private is absolutely the right move, especially in the wobbly retail climate. I'm comforted that J.Crew is making the correct decisions right now. I wish they'd been a little more sensitive to stockholders...but what's done is done. I look forward to the company being out of the public's critical eye so that they can focus on a return to quality and engaging design.

  27. Total OT, but still makes me laugh every time I see it:

    Product Short Desc - Please update at the product level

    spotted here:

    Found it by searching "cobblestone." Love the color, and this dress is pretty, but I think at $850 they better update that product desc soon.

  28. I have to agree with the comments on the men's section. My eyes are always drawn to their prints and fabrics.

    Just this week I got daring and purchased the Men's Gingham Button Down XS (I'm a 2 in Women's) and I LOVE it. I get a little retro, true borrowed from the boys vibe.

    Besides the vibe the fabric is what I really love about it. Thicker than the womens, not just a hanging tissue without structure. The collar doesn't fall and the buttons are just a bit thicker so they don't mysteriously unbutton all day as I am toting baby and bags around.

    Since I was on a roll I ordered a crewcuts boys tee because I needed a white tee and couldn't help but wonder why they can't use the same fabric for the womens line? It is soft, not heavy but not to thin (read transparent). I just want to know if there are really any women out there wearing just a plain white tissue tee from the women's side? (I can't stomach seeing every part of my unders through my tee)?

    I guess you could say I took borrowing it from the boys seriously this week. Maybe this should have been a comment on the last post! : )

  29. @dinagideon -- pretty funny! And even crazier yet that hasn't kept the dress from selling out in many of the sizes.

    Looks like the website is broken. Maybe they'll offer a promo code to say they're sorry? hint, hint? ;)

  30. It is five hours since Dina's comments and the error is still on the site. Wow J Crew. Monitoring software broken? Guys in IT with cool music gone home? Issue with the CMS?
    BTW - Not worth $850 even with a short and long desc.

  31. ^ above, by "broken" I meant that the home page jcrew.com wasnt working. It was all fixed again 5 min after I posted.

    So I wasn't going so far as to suggest that the funny error Dina saw is code-worthy.... not that greedy! :p

  32. To his statement "More and more markdowns drive people away from regular price in theory", I'm glad he added the "in theory" part. I don't think it applies much to J Crew customers. I don't always wait for things to go on sale, but if I do it's because I refuse to buy at the high full price. The shoes are a great example, I will not pay $275+ for a pair of shoes. The markdowns actually draw me in to buy things I would otherwise not buy.

  33. dinagideon, that's funny!! What a beautiful gown. I added it to my card and sure enough the name of the product is still Product Short Desc. What a clever postmodern name for a dress. :)


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