NEW YORK — J. Crew Group held its first annual meeting Tuesday since going public in June 2006 and it proved to be a breeze for Millard “Mickey” Drexler, the chairman and chief executive.
This story first appeared in the June 13, 2007 issue of WWD. Subscribe Today.
“Our business strategy is simple,” Drexler told a group of about 30 shareholders and associates at the Gramercy Park Hotel. “It”s to give customers the best we can give them. Quality is a religion for us.”
He added: “Our goal is to be the best, not the biggest.”
“We want to be famous for certain things,” like the critter details and madras, he noted. “We don”t want to be in the commodity [business],” Drexler said.
Then he preached the gospel of elevated standards that he and his team have implemented — from the design and fabrications of J. Crew products, to some trading up to higher price points without sacrificing lower prices, and strengthening ties to customers, even if it takes e-mailing them personally.
Drexler recently mailed a letter to 40,000 top customers providing them with his e-mail address and those of some of his other top lieutenants, such as Jeff Pfeifle, the president; Lisa Barnes, head of customer service, and Jill Hennessey, head of retail stores. He”s encouraging shoppers to e-mail as a way to resolve any problems with J. Crew and promising a response within 24 hours. In the corporate world, Drexler noted, “It”s really difficult to get to a ceo today.”
However, at J. Crew, there”s access. “We promise to get back to our customers, particularly in the wedding dress area where there is a lot of anxiety. We are there 24-7 to take care of you. We have no layers in this regard. We all work for our customers,” Drexler said.
Later, Drexler said he”s received only a few e-mails, so apparently customer satisfaction is high. The proof is in the results. For the three months ended May 5, J. Crew”s net income more than tripled to $24.6 million, from $7.8 million, and same-store sales jumped 13 percent, or 8 percent after adjustments for calendar shifts.
At the meeting, there were more positive numbers to report, including productivity gains. Drexler cited “three years of double-digit comp-store growth,” and a hike in operating profit from an 8.3 percent rate in 2005 to 10.6 percent in 2006. Sales per square foot grew 15 percent to $542 from $470, and there was a 16 percent increase in inventory, driving a 24 percent revenue increase last quarter.
The ceo reiterated what he”s been saying for a while, that J. Crew is focused on providing customers with alternatives to very high-priced designer collections, and pointed to some of the brand”s top-priced products, including the $2,500 wedding gown. J. Crew has traded up within the past year or so with its J. Crew Collection for women, though Drexler stressed, “We don”t buy a lot of goods. Usually demand exceeds our supply and we like that.”
Within the pricier side of the offering, there are also $3,000 shearling coats and men”s handmade blazers in the $2,000 range.
While adding some higher-priced items, “I don”t want anyone to think we are not protecting our friendly price points,” Drexler stated. It remains multitiered.
He described J. Crew as a balanced, multichanneled company where 70 percent of the volume emanates from stores, 27 percent from direct, and 3 percent from other areas. The company operates 186 retail stores and 53 factory outlets, as well as catalogues and a Web site. Drexler said 49 percent of J. Crew”s active customers shop multiple channels, and that the multichannel customer spends twice as much. The plan is to open 37 retail stores in 2007, which translates to 7 to 9 percent net square footage growth.
The new Madewell brand, launched by Drexler last year, is geared for women who want cool clothes but don”t want to take a mortgage out to buy them, as he said. The brand has five stores in operation and is closing in on a Manhattan location.