Gap’s ‘Mickey’ Drexler: Story of a Turnaround

Four years ago, it seemed that the only gap at the Gap Inc. was the difference between what the retailer was selling and what its customers wanted. The San Bruno-based firm, which gained prominence in the 1970s by selling Levi’s blue jeans to the teen-agers of the baby boom, found that jeans appeal was fading in the 1980s as baby boomers became adults.

Enter Millard S. (Mickey) Drexler. The brash young fashion whiz--a Bronx native whose credentials included management stints at Bloomingdale’s, Macy’s, Abraham & Straus and Ann Taylor--was named president of the flagship Gap Stores division in December, 1983. He soon started on a major face lift of the division, de-emphasizing jeans in favor of brightly colored sweat shirts and sweat pants, sweaters and blouses and other casual wear that appealed to older, higher-income customers.

The results have been impressive. Analysts call the Gap’s turnaround one of the most dramatic in retailing history. Its earnings rose from 37 cents per share in fiscal 1984--Drexler’s first full year at the Gap--to $1.93 in fiscal 1986 ended Jan. 31, 1987. Its stock price has been even more impressive, rising from a range of $4 to $6 in late 1983 to its current price of about $56, while retailing stocks overall have risen only 54.7% in that period.

Is He Worth It?

In appreciation, the Gap in fiscal 1985 granted Drexler rights to 500,000 shares, or about 3% of the firm’s stock. Last year, Drexler took possession of 166,668 of those shares, valued at $6.8 million, boosting his pay to $7.7 million for the year. That put the 42-year-old executive far ahead of the income of Gap Chairman and founder Donald G. Fisher, whose 1986 compensation totaled $963,077.

Is Drexler worth it? Drexler won’t say. A Gap spokeswoman said company policy forbids officials to comment on executive compensation matters.

But analysts aren’t complaining.

“Clearly, that’s worth a lot,” Robert F. Buchanan, senior retailing analyst at L. F. Rothschild, said of the dramatic rise in Gap stock since Drexler joined the firm. “Shareholders have derived themselves tremendous benefit from his work.”

“Whatever it takes to keep him, he deserves,” said Marion S. Schultheis, analyst with IDS Financial Services, a Minneapolis money management firm that owns more than 5% of Gap shares through its mutual funds and pension fund accounts. “Without Mickey, there’s no story at the Gap.”