J. Crew Names Drexler CEO Its Third in a Year

Less than six months after hiring Ken Pilot as CEO, apparel cataloger/retailer J. Crew has replaced him. On Jan. 27 the New York-based company named former Gap CEO Millard “Mickey” Drexler chairman/CEO. Pilot, the former head of The Gap’s international division who joined J. Crew in August, resigned.

J. Crew chairman Emily Woods, the daughter of company founder Arthur Cinader, also relinquishes her title. She will remain a member of the board of directors and an investor in the company.

Jennifer Black, executive vice president/senior research analyst for San Francisco-based investment bank Wells Fargo Securities, describes Drexler as “the Michael Jordan of retailing — a brilliant merchant.” But in hiring Drexler, J. Crew doesn’t get just a brand-name retailing honcho; it also gets $20 million in investments. “At his request,” according to J. Crew spokesperson Owen Blicksilver, Drexler is investing $10 million of his own money in J. Crew. Majority investor Texas Pacific has matched his investment with an additional $10 million.

Drexler, who had retired this past September after nearly 20 years with The Gap, brings with him a president for J. Crew: Jeff Pfeifle, former executive vice president, product and design for The Gap’s Old Navy unit.

“It was just an unusual set of circumstances in which Mickey became available,” Blicksilver says. “Subsequently, Texas Pacific, not J. Crew, jumped at the opportunity to bring in someone of his experience and caliber combined with his willingness to make a significant investment in the company.”

When Pilot was hired as CEO, three months after Mark Sarvary’s resignation as chief executive, J. Crew emphasized Pilot’s vast retail and merchandising experience. The appointment of Drexler further underscores the company’s determination to become a major retailer and its concerns about the direction of its merchandising. When Drexler took over as president of The Gap in 1983, the company operated 566 stores. By the time he left last fall, Gap operated 4,294 stores.

At press time, J. Crew’s 2002 sales were expected to be approximately $750 million, down from $778 million for 2001. Catalog sales accounted for $120 million; Web-based sales, $150 million; outlet stores, $75 million, and full-price stores the rest.

To turn J. Crew around, Wells Fargo’s Black says, Dexter needs to “fix” the merchandise assortment and figure out who the J. Crew target customer is. During his tenure at The Gap, Drexler managed to turn The Gap buyer “into an ageless customer while narrowing the assortment and going back to basics for everyone,” she says.

Indeed, Drexler will have to define what J. Crew stands for, says Ted Pamperin, a partner with Summit, NJ-based catalog investment and consulting firm American Catalog Partnerships and a former J. Crew catalog vice president. “The early strategy was to effectively be a Ralph Lauren at half the price,” Pamperin says. “That drifted to Calvin Klein at a lower price. But over time, that got confused not only as to what designer represents the brand identity of the business but also who the customer is — the college student or the married couple in their 30s.”

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