Drexler, who owns 10 percent of the company, will stay on as chairman, and will be succeeded as CEO by Jim Brett, who was most recently president of home furnishings company West Elm.
“This is an exciting time for J.Crew as we continue to make significant changes to position our company for long-term success,” Drexler said in a statement. “As chairman and an owner of the company, it is my responsibility to focus on the future of J.Crew and find the right leadership to execute on our strategic plans.”
Drexler's announcement follows news that Jenna Lyons, J.Crew's longtime creative lead, will be leaving the company after 26 years. During their years of collaboration, Drexler and Lyons transformed J.Crew into a cultural phenomenon, shaping the way an entire generation of American men and women dress.
The one-time retail dream team failed to sustain that winning streak, however. In the 2016 fiscal year, net sales at J.Crew were $2 billion, down 6 percent from the previous year. Sales at stores open at least one year were down 8 percent.
Turnaround efforts — including a return to the preppy “basics” that performed so well in the past and a move into athleisure with a multi-season collaboration with New Balance — have yet to move the needle.
The company has been boosted by Madewell, which saw net sales in 2016 increase 14 percent to $341.6 million, with comparable sales up 5 percent. But the company's debt — which totalled $1.5 billion, net of discount and deferred financing costs, at the end of last year — has proven an albatross, and has reportedly led the company to consider a debt restructuring.
The company revealed in April that it plans to cut 150 full-time jobs and 100 open positions, in a major restructuring designed to streamline the troubled business. The effort should result in pre-tax savings of $30 million, but cost $10 million in the first quarter of fiscal 2017 in severance payments and other termination costs.
Drexler, 72, who previously led radical turnarounds at Ann Taylor and Gap, admited he didn't anticipate quite how much technology would reshape retail in a Wall Street Journal interview last week. “I’ve never seen the speed of change as it is today,” he said. “If I could go back 10 years, I might have done some things earlier.”
Certainly, the retail landscape has been changing rapidly, as fast fashion brands embrace data and sophisticated tech-led supply chains that help them respond to consumer feedback and get new product on sale faster.
It's not just technology though. Like many specialty retailers, J.Crew has also been squeezed by discount culture, the casualisation of dress and the consumer's penchant for fast fashion, which relies less on one well-defined aesthetic and more on moving trends quickly to the market.
Innovation, it seems, is what J.Crew is seeking from its new CEO. On Brett's appointment, Drexler said: “Jim has a proven track record of pushing for innovation and growing omnichannel brands. I look forward to moving into my new role and assist Jim and the team in every way possible to help ensure a smooth and successful transition.”
Brett, who will begin his role at J.Crew in July and will also join the company’s board of directors, said: “I’m honoured to work with J.Crew’s talented team of leaders, board of directors and Mickey, who have built an iconic American brand. J.Crew has tremendous opportunity to play a more meaningful role in our lives, and I look forward to leading it through its next phase of growth.”