Even when he's 3,000 miles away, there's no escape from Mickey Drexler in the halls of J. Crew headquarters. A few weeks ago, the ceo of the retailer known for its mail-order catalog and preppy style was visiting a store in Palo Alto, Calif., when he got a rave review from its manager about the latest shipment of clothes. This, Drexler felt, all 550 employees at the company's New York City office needed to know immediately, so he called HQ and got patched into the p.a. system. "We just gotta keep doing it," the boss's voice boomed through hallways lined with racks of Argyle sweaters and seersucker shorts.
When Drexler showed up at J. Crew in 2003, no one was doing much of anything. Sales had dropped four out of five years running; the company's majority owner, private-equity firm Texas Pacific Group, had changed CEOs like last season's fashions, three in five years. On Drexler's watch, J. Crew rebounded dramatically, earning $3.8 million in 2005, its first profit since 2000. On March 13, the company reported 2006 sales of $1.15 billion, up 21%, and a healthy profit of $77.8 million.
That turnaround is especially sweet for Drexler, who arrived at J. Crew with a down-and-out story of his own, having weathered a two-year slump and ouster at Gap, the company he built into a $14 billion icon over 19 years, most spent as president and ceo. Today, while Gap flails--in January it got rid of Paul Pressler, the CEO brought in to replace Drexler--J. Crew, with only 226 stores, is one of few companies in the overdeveloped specialty-apparel arena with the potential for real growth.
How J. Crew got here traces to Drexler's beloved p.a. system, a technology of choice for the hyper-communicative 62-year-old, who wears jeans and an untucked dress shirt to work and uses phrases like "You da man." Drexler, a Bronx Science grad who got an M.B.A., then followed his father, a button buyer, into the clothing business, is always in motion--hence the p.a. system he uses like a high school principal to bark out questions (Who shops online?) and commands (Don't forget to turn off the conference-room lights). On one of his first days, Drexler got on the horn and asked for whoever was in charge of fit to come to his office, a corner blocked off by cubicle partitions. Twenty-five people showed up--with 25 ideas about how garments should hang. "Now I understand the problem," he said. As he recently explained, "In any business, there has to be a vision."
And Drexler has one. He has rebranded J. Crew as a store that sells basics like tank tops and Capris but also dares to inch up the food chain of craftsmanship (think cashmere sweaters), avoiding the race to the bottom by refusing to woo price-conscious consumers and sell ever cheaper clothes made with ever cheaper labor--a trend driven by discounters like Wal-Mart and Kohl's that has rippled to specialty shops. He has also taken away the fashion-by-engineering ethic that made J. Crew predictably boring.
J. Crew's good news is evidence that Drexler's gift for knowing the right goods has returned. "There are perhaps four or five people in specialty retail who can, at a very high success rate, stand in a room of clothes and say, 'I like that--buy 10 of that. I like that--buy 10,000 of those,'" says Jim Coulter, the founding partner at Texas Pacific who recruited Drexler. Or, as J. Crew president Jeffrey Pfeifle says, "It's like allocating a portfolio--and Mickey is a great investor."
Drexler's talent is fed by his near obsessive information intake. "He watches everything," says analyst Jennifer Black of Jennifer Black & Associates, which is how a single comment from a call-center operator about bridesmaids buying cotton dresses launched a line of formalwear that now includes $3,000 wedding gowns.
Like all great merchants, Drexler is a relentless store walker, picking up details on operations, fashion and consumer behavior like so much lint. "You can get numbers, but there's no flavor," says Drexler, who fell in love with retail during a summer job at the now defunct Abraham & Straus department store exactly because he wasn't deskbound. After stints at Bloomingdale's and Macy's, he became ceo of Ann Taylor and revived the company, which got the attention of Gap founder Donald Fisher. It has all contributed to an almost eerie command of what's happening around him, such as when he comes across a size-2 polka-dot miniskirt and knows an online customer has been looking for it.
The system, though, isn't flawless and neither is Drexler. In the fall of 2005, J. Crew stocked heavy sweaters and classic styles, then watched the temperature rise and shoppers recede. Yet that misstep paled next to the one that ended his reign at Gap in the late 1990s, when Drexler overreacted to fast-fashion chains like H&M and took Gap trendy, alienating its core khaki customer. That call, exacerbated by an overaggressive store expansion, led to his forced resignation.
That's why growing smartly--instead of quickly--consumes Drexler. Last year J. Crew added just 25 stores; this year 35 to 40. "We don't want to be bigger faster," Drexler told analysts. "We want to be better faster." Consider Madewell, a new store that could rival his creation of Old Navy for Gap. Clothes at Madewell are casual (hoodies, bubble tunics) and cost 20% to 30% less than J. Crew's. While Drexler drove Old Navy from zero to $1 billion in sales in four years, the plan at Madewell is slow growth: five new stores in 2007. "We're going to give it a couple of years and then make a decision," says Drexler. "If it's successful, it's a whole new business."
Still, the more stores, the more time Drexler will spend in them, taking notes. When he finds something interesting, he'll no doubt send word. They'd better keep the p.a. system in good working order.