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Mickey Drexler: "I am so jealous of Louis Vuitton" / .@BloombergTV

 Mickey Drexler: "I am so jealous of Louis Vuitton"


Mickey Drexler, chairman & CEO of J. Crew, spoke with Bloomberg Television anchor Stephanie Ruhle from the Robin Hood Investors Conference in New York yesterday about the current state of retail.

When asked about retailers like Louis Vuitton who never need to go on sale, Drexler said, "I am so jealous of Louis Vuitton, okay? And that's a 100, 200-year-old brand that has had high integrity for a couple of hundred years. You might add Chanel into that as the only perhaps other one out there and a few others."
Drexler said J.Crew thought jumping into the athletic trend in apparel but decided against it: "Where we thought about being in, was the active professional kind of business, the yoga or the Under Armour kind of business, but we're not getting in because we don't have the expertise to do that…We're pretty satisfied with the breadth of our products. And now it's a matter of the correct expansion, correct design involvement, and quality."
 CREDIT: BLOOMBERG TELEVISION


STEPHANIE RUHLE, BLOOMBERG: Mickey, you've got to tell us. What does retail feel like right now? You did a store visit this morning. What's the vibe?

MICKEY DREXLER, CHAIRMAN AND CEO, J. CREW: Well I think the vibe is it's challenging, a little difficult. Get me the best deal. And you got to be more creative and you got to be more strategic and you got to just deliver more than your competitors deliver.

RUHLE: In terms of creative, is it just about offering sales? I drove down Fifth Avenue. Gap's offering 75 percent off. It's hard not to go in.

DREXLER: Well it depends if you like the goods or not. We're not in the customer who is looking for a deal business. And yes it's challenging as every retailer today is reminding everyone about the deals. That's not our business, but it is - it does create a certain environment.

RUHLE: How can you afford not to be in that business? When I look at brands like Ralph Lauren, Michael Kors, Coach, I feel like I buy more at an outlet mall from them than I do in their retail stores.

DREXLER: Well it's - look, this is a long-term business and job for me. We - we move forward as we see the market demands. We have a very successful factory value business. And if - if retailers want to create by only doing price and cheap, long term will tell the story. There's - how many retailers are not around over the last 20 years? I think at last count at least 50 or 60 that you've heard of. It's about product, it's about quality, and it's about connecting with a customer. Yes, it's challenging right now.

RUHLE: Then is it a risk? When we look at other companies like The Gap, like Target, like JCPenney bring in CEOs that are not industry insiders, at the end of the day you're a man who truly knows the product. Does it surprise you other companies are going in a different direction?

DREXLER: Well it's - I think retail is an art and a science.

RUHLE: How?

DREXLER: You better have both. You better have creative or else if you don't differentiate your product, move forward, design it well, or have something that is not available and you're just building on price, you're going to eventually lose because someone will sell it for cheaper. I can't comment on what they do. The boards of directors might have a perspective. But to me it's all about product and it's about execution. It's about sourcing. It's about customer service. But isn't the first thing a customer buys is the goods?

RUHLE: Then is the cheap way to do it lock in these collaborations? Because from Kohl's to an H&M to a Target, it's all about getting this high-end designer to sell a cheap product.

DREXLER: Well you'd have to ask the designer what the deal is and what the economics are. I'm not sure I understand that game, and I'm not sure it's long term. But then again, it's just my personal opinion.

RUHLE: Why does J. Crew need to do collaborations? Why does J. Crew need to sell me a Barbour jacket when you could sell me your own jacket and I'd buy it because it's J. Crew?

DREXLER: No. There's - collaborations - first of all, it depends on what a collaboration is. So we have fun with a lot of our designers. People - well Barbour is, for example, a great brand, and you can't do a Barbour jacket. We don't sell a lot of Barbour, but we go after what our customers will like and what we think they will like, which enhances our own assortments. And there are things that a brand will do authentically much better than we could ever do, and particularly in men's clothes.

RUHLE: What does your customer want? Is it luxury? In the last few years with J. Crew Collection, it's put you on another level in terms of editorial and style and desire.

DREXLER: Well first of all I want to put that into perspective. Collection is about this big in the company. We - we want to just have high-quality products with good taste and good value. And I think if you walk into our stores today, you'll find that. On the other hand, the reality of the world is sales, sales, sales. Every store is screaming it from the better stores to the non-better worse. But that's what - that's what we do.

RUHLE: Then do you look at a Louis Vuitton, who never goes on sale, and say that's how to do it? Deliver the product and you choose the price.

DREXLER: I am so jealous of Louis Vuitton, okay? And that's a 100, 200-year-old brand that has had high integrity for a couple of hundred years. You might add Chanel into that as the only perhaps other one out there and a few others.

RUHLE: You know who else loves Louis Vuitton? Asia. How's your Asian expansion going?

DREXLER: Well Asia might not be as in live as much from what I hear. We have two stores in Hong Kong and so far, so good. We're very pleased. And we have - Lane Crawford also sells our goods. But it's small. We're tiny. It's early days. And it takes - building a business is a forever thing. So time will tell, but we're so far happy.

RUHLE: You built your business from a catalog. How important is that catalog business today?

DREXLER: The actual business from the catalog is minimum.

RUHLE: Really?

DREXLER: Yeah. It used to be 100 percent. We started before my time as a catalog company with a wonderful feeling for the products. The stores opened in 1983, the first store I think at Seaport. Right now over 80 percent plus and going higher of the catalog customer goes online. But it's the style guide. It helps - helps people on how to dress. It also gives a good sense of us more so than perhaps just our online site.

RUHLE: And as the retail industry struggles, do you look at bricks and mortar and say I see less and less people in malls, I don't want to be there?

DREXLER: No. It's just a balance. Everything in life's a balance. I see less and less people in malls over the last six months or a year. We don't have too many stores, so I'm kind of happy about that. We still are opening stores in malls. But it is a challenge, and I think the malls need to be more exciting and more compelling. And every department store is a mall today. Every mall is a mall, and I think that's an issue. Where's the differentiating product? It's about the product and why do I want to shop in a particular store or buy a brand.

RUHLE: The way consumers are shopping now demanding sales, are they killing product? Because it's making your margins narrower and narrower.

DREXLER: Well that might be life. I don't think any consumer can kill a product. I think the retailer has to have pride and integrity in what they do. And there are enough of us left out there, maybe much less who aren't playing the price game. It's what we do. It is hard, but nothing's ever been easy.

RUHLE: Does this fast fashion, the Zaras of the world, affect you in any way?

DREXLER: Well they're really good. Zara, who I have a lot of respect for. If you want clothes that don't last a long time and you want to be of the moment and you want a designer look, from what I hear - I don't wear their clothes - you might go there. It's not going to be in your wardrobe a year from today. I think they know that. They're really good at what they do. We on the other hand make clothes that we want people to keep and never throw out.

RUHLE: But isn't that hard? Because then you can't sell more clothes. I buy my J. Crew jeans and I keep them for 15 years.

DREXLER: Thank you, ma'am. I like that. It's a balance.

RUHLE: What's the one area you're not in that you could see yourself getting into in the next few years?

DREXLER: Well I'll tell you where we thought about being in, was the active professional kind of business, the yoga or the Under Armour kind of business, but we're not getting in because we don't have the expertise to do that. We're getting into businesses that we're going to be more aggressive about, more ambition about, and invest more, but we're pretty satisfied with the breadth of our products. And now it's a matter of the correct expansion, correct design involvement, and quality. And I say quality because that's really important. And luxury today, just stand on the streets in any city in the world. I'm not sure what's scarce or not anymore.

RUHLE: When you walk through the streets in Europe and it's J. Crew-less but you look at the economic climate there, do you not see yourself being there for quite some time?

DREXLER: Well we're in - we have four stores in the UK. We're opening two stores in Paris next spring. The - we're tiny. So I think it's always nice to get into a business where you're tiny and you have almost no way to go but up. The world's over-stored. The world's over-garmented. That's a fact of life. But again, it's long term. And we'll see who makes profits, who get returns on investment, and time will tell.

RUHLE: You're a true fashion man, an industry icon, but do you look at last week the market volatility? Do you pay attention to it at all?

DREXLER: By the way, I don't call myself a fashion man. I'm a business person who likes style and quality, and you have to try to read trends and connect dots. Of course you look at the markets. If you look at the environment and the feeling in the world today - now this is personal to me. It's not like you wake up every day saying this is great. We have Ebola. We have a bad market. We have all this stuff going on. I think the mood does in fact affect every consumer, and I don't think it's the happiest moments in the world. But I'm a little - that's my - the way I think.

RUHLE: Does it affect your day to day? Clearly you can't answer if there's a J. Crew IPO coming, but do these markets when they seem frozen, is it going to affect what you could do in the next year?

DREXLER: When you have my job, you have to like really be happy every day.

RUHLE: Are you?

DREXLER: You have to smile. Well outside I am. Inside, you eat yourself alive when there's, like, challenges. But I'm - I go to work every day and you have to be optimistic and try to do better every day. And anyone who runs any business needs to continue to do better the next day. So I'm very excited, and if I weren't I shouldn't  do what Ido.

RUHLE: Mickey, it is an honor and a pleasure.

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