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Black Friday has ‘been promoted to the Nth degree, almost a cliche’: Alex Mill CEO

Mickey Drexler, Alex Mill CEO and Former Gap CEO, sits down with Yahoo Finance's Brian Sozzi to review the state of retail, consumer spending, inflation, Black Friday shopping,

Video Transcript

BRIAN SOZZI: Let's welcome in our first guest, Alex Mill CEO, Mickey Drexler. I should also note, of course, the longtime legendary CEO of Gap and J.Crew. Mickey, always good to see you. Where are all the shoppers they're not buying anything.

MICKEY DREXLER: Well, they probably will. My guess is they're waiting for the prices to drop. I think Black Friday probably started a week or so ago. Everyone seems to be on sale with lots of price cuts. And it's been a tough go the last month or two.

BRIAN SOZZI: I have to give you a shoutout. I think it was three or four months ago, you were on Yahoo Finance Live. And you said, Brian, I'm not seeing a lot of good things in retail. And nothing good really has come out of retail. Since you said that, margins under pressure, Retailers with too much inventory. How do you think this holiday season ultimately shakes out?

MICKEY DREXLER: It's funny that you said that. I have a lot of people say, why are you so negative? I say, because it's negative out there. I think it's-- I don't know for sure. It has to be difficult because of the discounts and Black Friday literally started a week ago with most people. I don't think it's easy to call. My hunch is, it will be not a good one, but we'll see.

BRIAN SOZZI: When will inventories get past their peak? I'm in a Target. I'm in a Walmart. I go-- recently went yesterday to Roosevelt Field Mall. There's so much inventory in these stores.

MICKEY DREXLER: They're in the stores--

BRIAN SOZZI: When is it gonna go away?

MICKEY DREXLER: But there's more in the distribution centers. Some of the companies are OK. I think it'll go away when the prices get low enough to move the goods. But we all planned too ambitiously for this fall and holiday, and we own the goods. And if you don't make plan, which I don't think many people are, you'll just have the goods stack up.

BRIAN SOZZI: Who ultimately wins in this environment?

MICKEY DREXLER: In this environment? Well, last week, I think Walmart won. I'm trying to think of who else won.

BRIAN SOZZI: I think that was the first-- I've never heard you mention Walmart.

MICKEY DREXLER: Well, I don't usually, but I think it's interesting. That was a food win. And they counted as retail. But I think half their business is food. A few others reported, and a lot of the reporting says they beat estimates. But estimates seem to be very conservative. I don't know who else won, really. I don't recall--

BRIAN SOZZI: Macy's was a surprise, a surprise winner.

MICKEY DREXLER: A surprise, but again, you have to see the margins. And you have to see how they end up this quarter. November, from what I hear-- and we had the same-- was very difficult. And now we're, I guess, entering-- I think we're in the second week or third week. But what I hear anecdotally is that people are complaining about business.

BRIAN SOZZI: Is Black Friday still a big thing?

MICKEY DREXLER: I think it's been promoted to the n-th degree. I think it's almost a cliche. And I don't think it's a big deal personally, but we don't-- I've never been involved in the Black Friday business. So it's a big deal, and TV makes it a bigger deal with lots of people lined up at the store.

BRIAN SOZZI: You have to keep the lights on, Mickey. You have to keep the lights on.

MICKEY DREXLER: Yeah, right, so.

BRIAN SOZZI: Talk to us about your-- well, your former employer, Gap. Now they don't have a permanent CEO in there. Why don't they just give you the gig?

MICKEY DREXLER: Well, I got into trouble when I saw you last time.

BRIAN SOZZI: Yes, you did.

MICKEY DREXLER: So there were a lot of my friends there. I ended up having to apologize to a number of them. So I really can't talk about them.

BRIAN SOZZI: What's their place? What should they look like?

MICKEY DREXLER: Well, they should look like Gap looks. I think it's a great opportunity to be the all-American uniform-ish with very fair prices and with good-looking clothes, lots of color. But everyone needs to look good. And, you know, I think they'll do much better.

BRIAN SOZZI: Talk to us a little about Alex Mill. Why are you still in the game?

MICKEY DREXLER: Well--

BRIAN SOZZI: This is in your blood, I imagine.

MICKEY DREXLER: Yeah, well, the game to me is a hobby and a sport. My son started it about 10 years ago. And I always liked the name. And I liked what I had felt there. I left J.Crew, and I was a little bored. I was on some boards and all that. And then I joined him, and I have [INAUDIBLE], who was with me for 15 years at Madewell and J.Crew. He quit on the temporary CEO. And so I put them together, and I said, wow, I'm employed again. So I'm in work every day because I don't know what else I do. I don't play golf. I don't sit on the couch much.

BRIAN SOZZI: But you're a bit of a celebrity here. We were sitting over around the corner. Somebody came over to completely unprompted, said, hey, Mickey Drexler. You must be Mickey Drexler. I sent an email to you 20 years ago, and you replied. You acknowledged that something was wrong with the product. I don't see a lot of other merchants do that. But give some advice to these retail CEOs who may not be doing that.

MICKEY DREXLER: Well, most big corporations-- this is my personal, private opinion-- very bureaucratic. You have to touch the team. You have to touch the people. And, you know, I-- a lot of them are big shots. And I grew up in the Bronx, so I don't love big shots. But I felt like everyone else felt. Please say hello. I work here, and you're important. And I learned what not to do. And I grew up in the Bronx. And that's kind of a place where you respect people. You're ambitious, and you want to be recognized.

BRIAN SOZZI: What is it like working with your son?

MICKEY DREXLER: We have-- we've worked it out. It's difficult for him, and it was difficult for me. But we've worked things out over the last year. It was not easy.

BRIAN SOZZI: Before I let you go-- I have 30 seconds-- your big prediction this holiday season. It could be a retailer that does well. How will things shake out?

MICKEY DREXLER: I think huge sales, and I think it's not going to be a very good one. I hope I'm really wrong.

BRIAN SOZZI: Well, it is always great to get some time with you. Mickey Drexler, thanks for coming out here. I know you're a busy guy, and this is not an easy location per se to get to.

MICKEY DREXLER: Yeah.

BRIAN SOZZI: Always nice to see you. Thank you so much.

MICKEY DREXLER: Thank you.