My lunch with Millard S. Drexler, the 67-year-old chief executive of J. Crew, the American clothing brand made world famous by its First Client Michelle Obama, turns out not to be a lunch. Or to be more specific: not just a lunch. It’s lunch, followed by a short walk, a couple of emails and two phone conversations.
It begins as just a lunch (a nice, two-hour one at Pulino’s pizzeria in New York) but later Drexler, known as Mickey, emails to say he realises he hasn’t answered one of my questions, has given it some thought and would be happy to discuss it if I want to have a phone chat.
This, I have to admit, startles me. After all, the question in question was: “What was your biggest mistake?” and Drexler had answered it, sort of, during our lunch. At the time – we were well into our food – he said, “It’s hard to answer, because I see all mistakes as learning opportunities,” a comment I chalked up to typical management speak, of the anodyne “turn all negatives into positives” kind. But this subsequent call back, in my experience, was not typical.
Typically I find that chief executives of $1.7bn companies such as J. Crew, with its 3,887 employees, 235 stores and its own hipper line, Madewell (face: British model and TV presenter Alexa Chung), are happy to give you the allotted hour and a half or so, then cross you off their to-do list. But Drexler, it turns out, is very consciously not that sort of chief executive.
He grew up in the Bronx, an only child with a father in the garment business and a mother who was a secretary; has been married to the same woman (Peggy, a psychologist) for 42 years; and last summer started doing SoulCycle indoor cycling classes with his daughter, who is in college. His son, who is out of school, works in clothing manufacturing. His favourite pastime is not playing the market or buying art but checking out property: his investments are all homes (an apartment on the Upper East Side, four estates in the Hamptons, including Andy Warhol’s old Montauk place, which he reportedly bought for about $30m) and a few other places.
This could sound very tycoon-like, were it not for his explanation: “Growing up, I always wanted a bedroom of my own.” Given his intelligence and his wife’s profession, it’s hard not to think he knows this is psychologically facile but doesn’t care. He is the sort of chief executive who in other times would have been called “folksy.” He famously has a loudspeaker system in the J. Crew headquarters in New York that allows him to constantly “talk” to everyone he works with and, occasionally, pipe in customers or store managers to talk to them too. He is not, in other words, likely to buy a $1,200 wastebasket for his office, à la former Merrill Lynch chief executive John Thain, which makes him a model chief executive for these Occupy Wall Street times.
Indeed, Drexler’s usual working uniform is a pair of jeans, a “relaxed” (ie wrinkly) button-down shirt, a grey T-shirt and a navy blazer, all of which he sports when he arrives at Pulino’s and all of which, as he shows me later by twisting around and otherwise contorting himself, are from J. Crew.
Drexler likes Pulino’s for a number of reasons. First, it is a few blocks from his office. Second, it is a Keith McNally pizza joint on the corner of Bowery and Houston with iron tables and a chequerboard floor; which is to say it is owned by a hipster restaurateur who gets the importance of neighbourhood, good food and low attitude. Third, it serves pizza, which Drexler is “addicted to. I love that thin crust! Do you love pizza?” he asks. I allow that I do. He looks pleased. He also looks at the waiter, who is hovering and wants to tell us about the specials.
Drexler wants the Marinara. “It’s not on the menu, but you know what I mean, right?” The waiter nods. “But no olives, OK? Take the olives off. And let’s have some of the meatballs – want to try the meatballs?” he looks at me; I nod. “And some prosciutto.” The waiter asks if he wants the ham first. “No – bring it all when she gets her food,” says Drexler, referring to my asparagus and tomato and mozzarella salad. “Bring it all at once,” he says, waving his hands at the table, then amending it to: “Bring it whenever it comes.”
“You know,” he says, leaning in, “wherever I go I always ask what the bestseller is. I was just in London, and I went to the Wolseley – have you been there?” I nod; whenever Drexler makes a reference, he always checks to see if you are familiar with it. “Great place, right? Well I was there for breakfast and lunch, and I asked the waiter what the most popular dishes are. Guess what he said?” he looks at me expectantly. I hazard: “Hamburger?”
“No!” he says. “Wiener schnitzel! I didn’t have that, but the guy I was with did; I had the second most popular: Cobb salad.”
Drexler was in London because J. Crew is in international expansion mode: in August they opened their first store in Canada and launched Canadian ecommerce; then they launched ecommerce in the UK and they are in the process of looking for a bricks and mortar space in England; next will come ecommerce in France and possibly Germany. Drexler wants a London store “because it really articulates what the brand is. It’s an emotional, visual experience in a way a catalogue or website is not.” He saw several areas, liked Covent Garden and the East End, but thinks Regent Street is the right place – though he adds, “But maybe I shouldn’t say this publicly? Maybe it’s not good strategy? Oh whatever, I’ll say it anyway.”
This does not surprise me: Drexler is famous for saying things that others in his position might not. It’s part of his not-typical-CEO schtick. For example, when I ask him what J. Crew was like when he arrived, he says, “A company with tasteless goods going nowhere.” He caused a ruckus in the industry a few years ago for getting into a heated argument with Burt Tansky, the lauded chief executive of Neiman Marcus, about whether consumers were going to stop spending and whether or not non-vertically-integrated retailers such as Neiman’s were toast, while they were on a panel together.
What other people call “arguing” Drexler prefers to describe as “passionate conversation”. He has been on the board of Apple for more than a decade as a non-executive director, and notes that Steve Jobs was a good example of someone who had a lot of “passionate conversations”. He says two of the most important skills a chief executive can have are: (1) understanding “that people who aren’t performing well need to know it”; and (2) avoiding “bullshit; people feel and see everything.”
But I digress, which is something that happens a lot around Drexler. When I ask him what J. Crew’s point of difference is, for example, he embarks upon a long and winding discourse about his career, going back to when he started as a buyer at Bloomingdale’s in the late 1960s. He moves on to his six years as president and chief executive of working women’s contemporary brand Ann Taylor and his 18 years at Gap, first as president and then as chief executive, during which he rode the Casual Friday wave from $400m to $14bn in sales and made the brand the biggest retail phenomenon of the 1990s. Eventually, even he loses track of what he is saying and has to ask, “What was the question?”
I say, “what’s special about J. Crew?” and this time Drexler brings up pizza. “I know what the most popular is going to be here,” he says, and touches me on the shoulder. “Margherita! It always is. Watch …” The waiter comes to present the ham, and Drexler asks him what the most popular pizza is. “Margherita,” says the waiter. Drexler looks delighted. “Have some,” he says, gesturing at the prosciutto, and continues.
“You know what the most popular ice-cream flavours always are? Chocolate and vanilla, and then maybe, well, I like cookies and cream, but I don’t know if that’s right. Strawberry?
“It’s the same with cookies: chocolate chip, then oatmeal raisin, then, maybe sugar. And you always have to have this in stock. I tell this to my team when we go out together: you need the Margherita! People like consistency. Whether it’s a store or a restaurant, they want to come in and see what you are famous for.”
OK, so what’s J. Crew’s Margherita? I ask Drexler as the waiter arrives with four plates and attempts to fit them around the table. “The Jackie sweater,” he says immediately, referring to a cashmere cardigan. “Then the Café capri. For men, the pre-washed shirt.” He looks at the waiter. “What ice-cream is the most popular?”
“Well, it’s gelato,” says the waiter.
“OK, what gelato?”
“Chocolate, vanilla” – Drexler has a “you see” smile on his face – “Then today we have Orange Allspice as a special.” This stops Drexler. It is clear that he thinks the Orange Allspice was someone’s not very good idea and that a lot of it is going to be left in the restaurant’s freezer at the end of the day.
“The meatballs are very tasty,” he says to comfort the waiter, who looks a little confused about his role here.
“You should try them on the pizza!” says the waiter helpfully. Drexler looks at him. “But you have meatball pizza, right?” he says carefully.
“Yes!” says the waiter, clearly not getting the point: if Drexler wanted his meatballs on his pizza, he would have ordered them that way. He didn’t, partly because he doesn’t believe in confusing things: food or fashion, you need to be clear about what you stand for.
Personally, he has always been very clear about where he stands and it did, indeed, begin with that Bloomingdale’s job: value for money. When he joined J. Crew as chief executive in 2003 (he didn’t reach this in his career speech but he had been fired from Gap six months earlier after a very bad 2001-02 when the brand seemed to have lost its way), it was “a discount business. But I thought it had a great name and good real estate, two things I had also seen in the Gap, and could be taken to another level … At the time, there was a lot of white space in the market between very cheap clothes and designer.”
In the space, Drexler saw opportunity. He installed the loudspeaker system because, he says, “I couldn’t waste a second; I couldn’t be waiting for people to call me back,” and started redefining the brand as understandable, good quality clothes with a fashion edge. He gave significant power to designer Jenna Lyons, who had previously been buried in the women’s creative team, and last month they held their first presentation during New York fashion week; Ikram Goldman, owner of an influential Chicago boutique (and the woman who dressed Michelle Obama and her children in J. Crew) said it was “the freshest thing” she had seen.
The waiter takes the plates and asks if we want coffee. We do, and Drexler asks if they have any biscotti. “The plate comes with four: two chocolate and two vanilla,” says the waiter. “I don’t want chocolate,” says Drexler. “Can we just have the normal kind?”
He gets what he wants, as he often does, but not always. Which brings me back to the question of his biggest mistake and the emails and phone calls that followed our lunch. While we were eating, Drexler had told me that he tried not to work on the weekends but that he did think. After our lunch he had been thinking about the mistake question and reading the news about Gap closing stores in America to expand in China. That had made him realise what his mistake was. So, though he was in California, he called to tell me. The mistake happened when he was at Gap and the brand was undergoing a “rapid expansion”, increasing its real estate holdings by almost 70 per cent, a move he opposed but ultimately oversaw. Now he says, “I didn’t fight the board hard enough to stop it. I should have fought harder.” He isn’t blaming them for a bad decision; he’s blaming himself for caving in.
Later, I email him: “Have you made that mistake again?” and a few minutes later my phone rings. “Not so far,” says Drexler, who knows he no longer needs an introduction. “Hopefully not ever.” He pauses. Then he says cheerfully: “Call me back if you think of anything else you want to know!”
Vanessa Friedman is the FT’s fashion editor
282 Bowery, New York 10012
Prosciutto board $14.00
Plum tomato $17.00
Asparagus salad $7.00
Meatball special $16.00
White biscotti x2 $2.00
Diet Coke $3.00
Cappuccino x2 $8.00
Total (including tax) $92.54
From bargain bin to Michelle Obama’s wardrobe: J. Crew’s journey
When Mickey Drexler arrived at J. Crew in 2003 the preppy clothes company was, as he points out, not in very good shape. Founded as a catalogue company in 1983 by Emily Cinader and her father Arthur, it was bought by Texas Pacific Group, a private equity firm, in 1997. Various chief executives came and went within the space of six years and the brand was languishing until Drexler raised the style content and applied one his favourite lessons to the company.
“I took a page from Brooks Brothers’ book,” he says, “and it was a high margin, high profit page: you don’t wholesale. Because if you wholesale you have two problems: one, discounters – you always have to drop your prices if they drop their prices; and two, margin. Say something costs you $50 to make. You mark it up to $150 for wholesale. The retailers mark it up 2.2 or 2.3 times, which is standard. You can’t undersell them, so you have to sell your sweater for $350. But if you are the only retailer, you sell it for $150.”
Today J. Crew has expanded to include men’s wear, women’s wear, children’s wear and bridal wear. Its prices are higher than they used to be – average $200 for cashmere, $350-$400 for a coat – but then they share some major fabric stockists with brands such as Ralph Lauren. Most of the clothes are produced in the Far East, something that provokes a little defensiveness from Drexler, who says, “I think most American consumer products, even the ones that say ‘Made in America’, are produced there.” Still, he admits, pricing has been “one of my biggest battles: convincing people who remember J. Crew from when it was a discount brand that the prices are justified.” By contrast, he says, “college kids see us as an aspirational product.”
In 2006 TPG and Drexler took the brand public – share price $20 – and last year they brought it private again, along with another private equity group, Leonard Green & Partners, for $43.50 a share (total value: $3bn). Drexler, who himself has a stake in the business, says he is very happy about it. “It means there’s no day-to-day headache of being under the gun of Wall Street investors, and having to constantly look at what you did wrong if you missed the day’s number,” he says. “It shouldn’t be ‘Why didn’t you make that number?’ It should be: ‘Why did you make the number you did?’ If you are private you can take a long-term view of building a business, and make investments without having to explain everything.”
Drexler thinks this is particularly important in the current economic climate, where consumers are increasingly choosy about how they spend their money. “We’re all going to be taking business from each other,” he says, when asked what he expects to happen in the retail market. “Let the best business win.”