J. Crew's CEO: The Obama Factor and Giving Consumers Value
It's been a tough time for retailers, but one company that's been getting it right is J. Crew.
First, they found friends in powerful places as the Obama family donned J. Crew attire during the inaugural festivities. More recently, the company forecast third-quarter earnings that were more than twice what Wall Street was expecting.
"It was an act of God," J. Crew Chairman and CEO Millard Drexler joked in a CNBC interview when asked how the Obamas began their association with the company.
But Drexler said Michelle Obama's decision to wear J. Crew was "incredibly smart."
"If you think about it, both aestheically and politically — and of course I'm biased — but it was incredibly smart for her not to go out and pay, especially during the last year, high prices for 'designer merchandise,'" Drexler said. (To hear the full interview, watch the video below.)
However, it's taken more than the Obama factor to keep J. Crew's earnings chugging since the year began.
Drexler said he's relied on the experience he's accumulated during past economic ups and downs to steer the company through the most recent downturn.
"We have been practicing for this day, so to speak," he said.
According to Drexler, the recession was "a loud cry" to get back to basics and start spending more realistically.
Although he does not like to compete on price, he does think that J. Crew clothing offers consumers value.
"The recession, in our minds, put a stop or a complete mind change to how consumers thought about buying," he asid. "America overlived its standards for the last ten years, overspent. The reality of value came back into being, which in a sense is what our mission is."
Drexler declined to give away any secrets about what styles the company will be rolling out in the spring.
However, for the third quarter, the company is expecting margins to rise 5 percentage points from year-ago levels. This will help it to meet its forecast, which was boosted on Thursday to a range of 54 cents to 59 cents a share for its fiscal third quarter.
Previously, the company had expected earnings between 30 cents and 33 cents a share. Same-store sales for the quarter are expected to be up in the high-single digits. More from Consumer Nation: Questions? Comments? Email us at firstname.lastname@example.org
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