A segment on Mickey Drexler, the CEO of J.Crew aired yesterday morning on CBS Sunday Morning. Check out the WWD’s announcement below. I have also posted a link to the article.

MICKEY IN THE MORNING: Millard “Mickey” Drexler and his unorthodox management style, from his daily bicycle ride through J. Crew headquarters to his trademarked off-the-cuff loudspeaker pages communicating company developments to the entire staff, gets profiled this Sunday on CBS’ “Sunday Morning” at 9 a.m.

Host Serena Altschul and producer Ramon Parkins were practically embedded at J. Crew offices, closely trailing Drexler and his team on and off for about a year, experiencing closed-door design reviews, spontaneous brainstorming sessions, photo shoots and the rise of new retail concepts, such as the Liquor and the J. Crew Collection stores. There’s also a sit-down interview with Drexler on the construction site of the recently opened men’s shop on lower Broadway. The segment is also scheduled to air on Charles Osgood’s weekly radio show this morning on CBS Radio.

Click “Clothes Made This Man, and Vice Versa” for the complete story of Mickey Drexler and J.Crew.

Women’s Wear Daily reported on Monday that J.Crew CEO, Mickey Drexler’s compensation was down last year compared to 2007.  In 2008, he earned $1.9 million compared to $2.8 million in 2007.  Please read the article below.

A big thanks to The Preppy Princess for helping me to obtain the article. 

Drexler’s Compensation Down in ‘08
by ALEXANDRA STEIGRAD
Posted MONDAY APRIL 20, 2009
From WWD ISSUE 04/20/2009

In a regulatory filing with the Securities and Exchange Commission on [April 17th], J. Crew Group reported Millard “Mickey” Drexler, chairman and ceo, earned total compensation of $1.9 million last year, down from $2.8 million in 2007.

Drexler’s $200,000 salary remained the same as the previous year. Although his stock and option awards rose 60.7 percent, to $1.7 million from $1 million in 2007, he and the other listed J. Crew executives received no bonuses in 2008, because the company failed to meet designated performance goals. Drexler collected a $1.5 million bonus in 2007 and $1.6 million in 2006.

Drexler received $14,900 in other compensation, a 40.9 percent decline over the previous year.

Total compensation for Tracy Gardner, president of the retail and direct divisions, shrank 24.8 percent, to $1.9 million, but her salary rose 5.3 percent to $720,700. Gardner’s stock and option rewards also increased 20.9 percent to $1.2 million.

Libby Wadle, executive vice president of the factory and Madewell divisions, had a 15.3 percent dip in total compensation to $958,717, but she earned an 18.2 percent bump in salary, which amounted to $462,000. Wadle’s stock and option awards totaled $488,018, a 38.7 percent jump over the prior year.

For the year, the retailer’s profits fell 44 percent to $54.1 million, or 85 cents a share, from $97.1 million, or $1.52 a share, a year ago. Revenues grew 7 percent to $1.4 billion from $1.3 billion in 2007.

Stock and option awards are reported based on SEC accounting guidelines. Because of vesting schedules and falling share prices, the compensation reported in these categories was not necessarily realized.

J. Crew Group, Inc. today announced financial results for the three months (fourth quarter) and fiscal year ended January 31, 2009 (fiscal 2008).

See below for the press release they sent out.

Fourth Quarter highlights:

– Revenues decreased 3% to $388.0 million. Store sales (Retail andFactory) decreased 3% to $252.0 million, with comparable store sales decreasing 13%. Comparable store sales increased 4% in the fourth quarter of fiscal 2007. Direct sales (Internet and Phone) decreased 2% to $123.0 million. Direct sales increased 11% in the fourth quarter of fiscal 2007.

– Gross margin decreased to 27.6% of revenues from 41.3% of revenues in the fourth quarter of fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities.

– Operating income (loss) decreased to ($20.4 million), or (5.3%) of revenues, compared with $43.3 million, or 10.8% of revenues, in the fourth quarter of fiscal 2007. Operating loss in the fourth quarter of fiscal 2008 includes non-cash asset impairment charges of approximately $2.1 million related to under performing stores.

– Net income (loss) in the fourth quarter of fiscal 2008 was ($13.5 million), or ($0.22) per share, and includes the impact of non-cash asset impairment charges of approximately $0.02 per share related to under performing stores. Net income was $25.0 million, or $0.39 per diluted share, in the fourth quarter of fiscal 2007.

Millard Drexler, J. Crew’s Chairman and CEO stated: “We are disappointed with our fourth quarter operating results. Our mission, day after day, is to adjust to this new, not fun, retail reality, while not compromising our long term strategy and integrity. We believe the actions we are taking, our focus on quality products and customer service,  along with our strong balance sheet, will position us well for when the environment eventually improves.”

Fiscal 2008 highlights:

– Revenues increased 7% to $1,428.0 million. Store sales (Retail and Factory) increased 7% to $974.3 million, with comparable store sales decreasing 4%. Comparable store sales increased 6% in fiscal 2007. Direct sales (Internet and Phone) increased 8% to $408.9 million. Direct sales increased 22% in fiscal 2007.
– Gross margin decreased to 38.9% of revenues from 44.1% of revenues in fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities in the fourth quarter.
– Operating income decreased 44% to $96.7 million, or 6.8% of revenues, compared to $172.5 million, or 12.9% of revenues, in fiscal 2007. Operating income in fiscal 2008 includes non-cash asset impairment charges of approximately $2.7 million related to under performing stores.
– Net income for fiscal 2008 was $54.1 million, or $0.85 per diluted share, and includes the impact of non-cash asset impairment charges of approximately $0.03 per share related to under performing stores. Net income was $97.1 million, or $1.52 per diluted share in fiscal 2007.

Balance Sheet highlights as of January 31, 2009:

– Cash and cash equivalents were $146.4 million at the end of the fourth quarter and include the impact of voluntary principal payments of debt of $25.0 million made during fiscal 2008. Cash and cash equivalents were $131.5 million at the end of fiscal 2007.

– Inventories at the end of the fourth quarter were $187.0 million, reflecting the impact of 40 net stores opened since the end of fiscal 2007. Inventory per square foot increased 7% at the end of fiscal 2008 compared to the end of fiscal 2007.

Over at The Consumerist, there is a story posted about a J.Crew customer who recently received 30 pairs of free shoes from the retailer after catching them in a web of lies. Please read his story below.

It started off with me shopping in a store in NJ. I really liked the sneaker there but the store was closing and I had to head back to Brooklyn. The sales associate told me to just go online and id be able to get the shoes for same price via website. They were 50% off in store, plus I had 15 % student discount. I call J.Crew online, and the sales person is super nice. She places me on hold to confirm with store the price.

She tells me that she spoke to the manager and that the shoes were never 50% off. I asked who she spoke to. Hang up and call store myself. Turns out there’s no manager in there by the name I was given

I call back J.Crew. I am told salesperson who i was working with left for the day, only to then find out she’s actually still in. Basically lied to non-stop.

I call CEO (Mickey Drexler). His assistant takes care of me. I have 30 new pairs of sneakers now.

This is a classic example of the policy and price inconsistencies at J.Crew. Some stores charge shipping of full price items, while others do not. Some stores match online prices while others do not.

On top of that, the website does always work. It’s always down and/or forbids online customers from browsing. (See “J.Crew Forbids Access to Some Online Shoppers.”)

This leads to an extremely negative shopping experience at J.Crew.  Perhaps, it’s time for J.Crew to issue another apology. (See “J.Crew Admits Their Woes.”)

Personally, I would love to see the retailer post the policies on the website in black and white. It would be nice and clear for everyone: managers, sales associates and customers. I would love to be able to print it out and carry it into the stores with me.

Yesterday, I read a tweet where someone wrote about J.Crew cutting jobs. I wasn’t sure if it was at the corporate or store level. The news has been confirmed as J.Crew just sent out a press release today.

In the press release, J.Crew is making many changes to cut corners and costs. The changes are expected to generate the company $40 million dollars in pre-tax savings. Looks like J.Crew is not faring too well in this economy.

So what is the company doing to ride out 2009? J.Crew will be:

• Reducing workforce by approximately 95 positions (including positions that are currently unfilled) primarily in the New York offices and support functions in the field and distribution centers. This represented an approximate 10% reduction in staffing for the departments included. The affected associates have been offered severance and related transition assistance.
• Suspending the 401(k) Plan Company matching contributions through the balance of 2009.
• Eliminating 2009 merit based wage increases for the entire workforce.
• Initiating other company-wide cost reduction programs to produce efficiencies in areas such as supply chain, store operations, real estate, catalog circulation, and other general savings in the New York offices.

And what did CEO, Mickey Drexler have to say about this?

“As we are all aware, we are operating in a very tough economic environment. This has required us to make some difficult decisions, which we do not take lightly, but feel are necessary to ensure we remain competitively positioned over the long term. However, we believe our financial flexibility, our team, and our focus on quality products and the customer will enable us to navigate these turbulent times.”

A reader of this blog, Maggie, recently wrote an email to Mickey Drexler about the quality of some of the clothes that she recently purchased. Her email was so witty that I had to share. Please read below! And thanks, Maggie for allowing me to post it!

Make sure to read the responses from Mickey!

From: Maggie
To: Mickey
Subject: Its not me; its you.

Mr. Drexler,

Let me first begin by saying: I LOVE JCrew. And I don’t mean in that flighty, write your name all over my notebook kinda way. No sir. We’ve been having an affair since I had babysitting dollars burning a hole through my Jordache’s. Its been long-running, passionate, (sometimes naughty) and usually happy relationship.

Until now.

I’m well aware you’ve retooled a boring and dying brand into something exciting, beautiful and full of things I want to wrap around my body. Why, what would I have done in Barbados without your aptly named shorts? Surely, I’d never go dancing in anything but your day to evening dresses? Work wardrobe? Please! I would’ve arrived to the weekly marketing meeting in only my Victoria’s Secret if it hadn’t been for JCrew. In fact, memories of my OWN wedding would be dulled to a faint halo without my matron-of-honor’s cream colored (she picked the color) strapless, A-line masterpiece. You get it. You understand that color is critical; style, cut, fit and details are the reasons I’m ready to whip out my Amex (or JCrew card as it were).

Yet, have you ever worn and washed JCrew, Mr. Drexler? Do you put your beloved threads through a front-loading, non-agitating washer on delicate, cold, practically hand washed by GE itself only to find that after 1 or 2 wears your beloved tissue tees show holes? Or the adored cardigan becomes something in poor comparison to one of your weaker moments at Target? I dare say you haven’t.

Its heartbreaking, Sir. And there are only so many times you can tell yourself “Oh, well. I bought this on sale.” or “Drat! Another reason to head back, I suppose” No, Mr. Drexler, I simply can’t do it to myself anymore. Or you. Its just not fair to US. The quality of this relationship has just turned into one insulting mess. Mostly insulting my hard earned Benjamin.

It pains me to say it but, Sir, please inform your Accounting Department that, effective immediately, there will be a several hundred dollar drop in monthly profits, for I have chosen to take my business elsewhere. Mostly to newer and smaller designers who understand the value of my 40 bucks (perhaps because they do their own laundry?). And while I will mostly certainly miss your romantic silhouettes, hot pink cashmere and perfect pencil skirts I will not for one minute miss your brand of condescending quality.

Here’s hoping you woo me back.

Maggie

Mickey’s response to Maggie

From: Mickey Drexler
Subject: Re: Its not me; its you.
To: Maggie
Cc: Scott, Brittany

Hi and sorry to hear how you feel-and appreciate your taking time send email-surprised you would think I don’t wear or wash JCrew-i do everyday not because I work here but because I love our clothes-
And I am a “quality obsessive”-
Only ask you, if willing, to speak to one of my associates as would love to get specifics- am also very curious what designers give you a “price/quality relationship”-
In any case would love to learn more about your experiences that led you to send email-
Mickey
————————–
Sent from my BlackBerry Wireless Device

Maggie’s response to Mickey

From: Maggie
Subject: Re: Its not me; its you.
To: Mickey Drexler

Mickey,

Thanks a million for listening! I don’t want to leave ‘the crew’ and would be happy to speak to anyone about the frustrations. (mostly cost vs. wear and tear). Any of your associates can call or email me whenever they have the time.

Thanks for the personal response. Enjoy your sun filled, wintry day.

Mickey’s response to Maggie

From: Mickey Drexler
Subject: Re: Its not me; its you.
To: Maggie
Cc: Scott, Brittany

Of course! If don’t listen how learn-
Brittany/Scott-please call Maggie together-and keep me posted-thx

Mickey

————————–
Sent from my BlackBerry Wireless Device

On Tuesday, I wrote in the post, “The Future of Luxury via J.Crew & Neiman Marcus” about how CEOs from many retailers met at the annual CEO summit hosted by Financo.

This year’s event has been in the news due to the discussion of luxury between J.Crew CEO, Mickey Drexler and Neiman Marcus CEO, Burt Tansky.  Both had very different opinions on how consumers will be responding to the perception of what luxury means to them.

It seems in this economic climate, neither of the retailers are not faring too well.  J.Crew’s stockis at a low of $8.56.  Because Neiman Marcus was purchased by two private equity firms in 2005, it no longer has a publicly traded stock.

Both retailers have been in the news lately. On Tuesday, it was reported that Neiman Marcus will be cutting 400 jobs.

Neiman Marcus losing about 400 jobs
by Maria Halkias

Neiman Marcus Inc. is cutting about 400 jobs across the country – including almost 100 people in the Dallas area – as part of an organizational review started six months ago.
Also Online

While the Dallas-based company was looking at ways to save money, luxury shoppers’ drastic reduction in spending “accelerated the urgency” of what had been a normal review process, said Ginger Reeder, vice president of corporate communications.

“We regret this more than any business decision that we have to take,” Reeder said.

Some laid-off employees were told Monday, and others are finding out today, she said.

About 370 to 400 employees are being laid off – slightly less than 3 percent of the company’s workforce.

And in response to the economic climate, J.Crew will be having its first ever sample sale in New York City. I wrote about this in the posts, “J.Crew Sample Sale In January 2009” and “J.Crew Sample Sale Just Weeks Away.”

The sample sale is hosted by Clothingline and will start next Tuesday, January 20th. and go on until Sunday, January 25th.

If you live in the New York City area, this is a must go to sale! Everything will be up to 70% off original prices. Special occasion dresses will even be at the sale!  To read an article about the sale, please click, “J. Crew, a sample-sale virgin no longer.”

Here is the address for the venue and hours of operations for each day.

Clothingline
SSS Sample Sales
261 W 36th Street
(between 7th & 8th Ave)
2nd Floor
New York, NY 10018

Yesterday, J.Crew issued a press release where the company said it is lowering its forecast for the fourth quarter as well as for the year ahead. To read the press release, please click here.

In an article published today at Women’s Wear Daily, CEO, Micky Drexler addresses the issue.

J. Crew Group lowered fourth-quarter guidance to a range of a loss of between 24 cents and 29 cents a share from its earlier expectations of a profit of between 5 cents and 10 cents.

“I’m not going to say we’re not disappointed,” said Millard “Mickey” Drexler, chairman and C.E.O. of J. Crew Group. “This has been an incredibly tough time for us, for retail and in general for most businesses in America. As difficult and challenging as business is, we have to keep this all in perspective. Business turned really difficult starting in the fall, and I don’t think anyone can say when it will get less so. We are shopkeepers who have to make certain we have, day-in and day-out, the right goods in the stores, online and in the catalogues, and that we are taking care of every single customer in the best way possible. We’re not sure when things will turn around. But I feel very good about our positioning in the marketplace when it in fact does turn.”

What changes do you think J.Crew needs to make? Has your shopping behavior changed? When do you think the economy will get better?

At a lecture earlier this year, Mickey Drexler told the attendees that J. Crew has initiated a company-wide hiring freeze Drexler revealed, even during the holiday season, which he said falls on a terrible calendar year retail selling-wise.

“If someone wants to hire someone, someone’s got to leave,” Drexler said.

Like J.Crew, many retailers have had to downsize. Luxury retailers, even Chanel are not safe in this economy.

Chanel sheds 200 jobs as sales of luxury items decline
by Lizzy Davies

Chanel is to cut 200 jobs as fears grow that the supposedly recession proof luxury market is falling victim to the global credit crisis. Citing a steep decline in this year’s sales, the largest French union, the CGT, said the losses at the French fashion label would concern all staff on fixed term and temporary contracts and come into effect on Wednesday. Sixteen posts would be cut from the brand’s boutique on rue Cambon in the heart of Paris’s fashion district, it added in a statement at the weekend.

The job losses, described by some commentators as the label’s worst crisis since founder Coco Chanel fired all her staff at the outbreak of war in 1939, represent almost 10% of the company’s production workforce. The redundancies come after a difficult year for the fashion, perfume, cosmetics and accessories businesses where growth has almost ground to a halt.

Last week the company announced it was bringing to a premature end a highly publicised global art installation for fears its quirky marketing operation had become a luxury the brand could not afford. Designed by British architect Zaha Hadid, the travelling show – inspired by Chanel’s quilted handbags – was due to come to London in 2009.

“In the current context we … prefer to refocus on our strategic investments in terms of development,” said a company spokeswoman, admitting it made little sense in the middle of a global downturn to pursue a project “where we weren’t selling anything”.

The troubles at rue Cambon will be taken as a warning signal for the rest of the luxury goods industry, traditionally thought to remain resilient in a tough economic climate. After several years of rapid growth, the sector’s coveted niche is showing signs of weakness and analysts at JP Morgan have predicted the luxury market will see sales fall by 4% in 2009.

Bulgari, the Italian jeweller, has forecast a lower profit for the year and has said it will not give an outlook for the new year after the global crisis knocked 44% off its third-quarter net profit.

Prada shocked fashionistas in Milan over Christmas by reportedly putting up sales posters advertising price cuts in their boutiques’ windows. Even world leader LVMH, the French group behind Vuitton and Givenchy, has had a tough year, postponing a plan to open a leading Vuitton store in Tokyo.

Last week, I wrote about how I was looking for the Storybook charm bracelet in the post, “The Storybook Charm Bracelet from J.Crew.”  My sister really wants this item and I successfully found it through using a We Will Find It Search from J.Crew. Thanks so much to everyone for your suggestions!

The necklace arrived earlier this week in a box with a note from Mickey Drexler.  The note is handwritten, but upon further inspection, I found that it is actually pre-printed. It is the thought that counts though.  J.Crew is right. I don’t have to shop there, but I chose to because I love their items.  It is a shame the website has been so intermittent this week.

We’ve all read the news and I think think it’s safe to say, we’ve seen better times. We understand that now more than ever, where you shop is an important decision…so we just want to say thank you for your continued loyalty to J. Crew.

Mickey

Back to the Storybook charm bracelet.  I really love it and am afraid that my sister may not end up getting it after all. I may have to do a search for another one. I really love the resin tortoise shell chain.  The  charms are very fun and playful.  Most of J.Crew’s bracelets do not fit my tiny wrist, but I found that this one looked really nice on. I am actually wearing it while I write this post.