The Exchanges

Q Alright, so you fly, you get to Osaka. By the way, what are you, I mean, are you, you're 23 years old. And, and were you, like, uh, presentable? Were you, uh, you know?

A I was presentable. I told my father, uh, when he told me he wasn't making the trip, that I didn't really understand his business well enough to do this on my own, at which he said, George, they're going to love you in Asia because you're my eldest child, your number one son, and they're going to love the fact that you're doing this because I can't. So I would get up every morning at about five o'clock in the morning and start studying because I literally didn't know much about the manufacturing of clothing, and I would study from, uh, Usually five to eight, including going to the, ah, breakfast restaurant in the hotels, which were quite glamorous. And, ah, he was right. A lot of people were very excited to talk to the number one son who had made such a long trip because his father couldn't make it.

AI assessment note: “I was presentable. I told my father, uh, when he told me”

Q Without the label, but if this was an open secret, why wouldn't some other company come in and like Macy's or some big company and try to do the same thing?

A Well, I, I think that the answer is that many did. There were people that tried to mimic what we did, but you know, part of it is, and I'm very, uh, proud of this. I, I did all the training originally at men's. And I used to say to, uh, our employees, look, men look at going into a clothing store like going to the dentist's office. So their wife says to them, I made you a dental appointment, and it's like the worst thing that the man can imagine. So they put off coming in to a clothing store until they can no longer defer it any longer. And from that intuitive, uh, understanding, we developed what we called shirt stacking, so that when a man purchased a suit, While he was in the dressing room, we would put together shirts, ties, belts, shoes, everything that would make the outfit really jump. Then we would present it to the customer. And we were not, in my mind, pushy, but we were not passive salespeople either. And the result was that our customers thought we had great service because they perceived this as service, and it drove a lot of revenue.

AI assessment note: “I think that the answer is that many did. There were people that tried”

Q What started to happen? What kind of, sort of, differences of opinion did you start to have with board members?

A I, I don't really know exactly what happened because as it got closer to my, ah, termination, I was cut out of more and more Of the discussions that the board was having. But I'll give you a simple example. We owned a division called K&G, and K&G did four hundred million. We had a hundred stores, and it was a super store in the sense that it was 25,000 feet, and it was men's and women's, and the price points were below men's warehouse. And I said to the board, K&G provides a unique opportunity for an offensive and defensive strategy, and they didn't quite understand what that meant, and so what it means is men's warehouse stores were able to raise the gross profit percentage By a full 10%, which is a thousand basis points over a decade, because K&G was protecting our opening price point position. And at the same time, because K&G was a significant national presence, it prevented other stores from realizing that Investing in low price clothing the way I had done in 73 would make sense. So the board and Doug wanted to sell K&G, and I told them that I would support them in selling it, but I didn't agree with it. So it was that type of decision, and the board represented it in their public relations releases as though I was unwilling to To, uh, cede authority, and I never understood what they were talking about, because I was totally explicit in, uh, explaining to Doug that he was …

AI assessment note: “the board and Doug wanted to sell K&G... but I didn't agree with it.”

Q He says, by unanimous consent, we're asking you to step down?

A Um, well, at first they said to me, we'd like you to become chairman emeritus. And I said, what is that? And they explained it, and it was a figurehead position. And I said, when do you need to know? And they said, by 10 o'clock. And the reason why was that we were meeting as a board in advance of a annual shareholder meeting. And so they wanted to, uh, get me off the perspectives as chairman of the board, and they said they could do it if I notified them by 10 o'clock that night. So we were in a hotel, so I was just by myself in a hotel. Where? In Fremont. And, um, I remember being in my room and thinking, you know, my lawyer was the company's lawyer. I had Very few good friends outside of the business. I had nobody to really talk to.

AI assessment note: “at first they said to me, we'd like you to become chairman emeritus.”

Q Alright, so you fly from New York via Fairbanks in Tokyo. You get to Osaka. By the way, what are you, I mean, are you, you're 23 years old. And, and were you, like, uh, presentable? Were you, uh, you know?

A I was presentable. I told my father, uh, when he told me he wasn't making the trip, that I didn't really understand his business well enough to do this on my own, at which he said, George, they're going to love you in Asia because you're my eldest child, your number one son, and they're going to love the fact that you're doing this because I can't. So I would get up every morning at about five o'clock in the morning and start studying because I literally didn't know much about the manufacturing of clothing, and I would study from, uh, Usually five to eight, including going to the, uh, breakfast restaurant in the hotels, which were quite glamorous, and, uh, he was right. A lot of people were very excited to talk to the number one son who had made such a long trip because his father couldn't make it.

AI assessment note: “I was presentable. I told my father, uh, when he told me”

Q What started to happen? What kind of, sort of, differences of opinion did you start to have with board members?

A I, I don't really know exactly what happened because as it got closer to my, ah, termination, I was cut out of more and more of the discussions that the board was having. But I'll give you a simple example. We owned a division called K&G, and K&G did four hundred million. We had a hundred stores, and it was a super store in the sense that it was 25,000 feet, and it was men's and women's, and the price points were below men's warehouse. And I said to the board, K&G provides a unique opportunity for an offensive and defensive strategy, and they didn't quite understand what that meant, and so what it means is men's warehouse stores were able to raise the gross profit percentage of By a full 10%, which is a thousand basis points over a decade, because K&G was protecting our opening price point position. And at the same time, because K&G was a significant national presence, it prevented other stores from realizing that Investing in low price clothing the way I had done in 73 would make sense. So the board and Doug wanted to sell K&G, and I told them that I would support them in selling it, but I didn't agree with it. So it was that type of decision, and the board represented it in their public relations releases as though I was unwilling to To, uh, cede authority, and I never understood what they were talking about, because I was totally explicit in, uh, explaining to Doug that he w…

AI assessment note: “So the board and Doug wanted to sell K&G, and I told them that I would support them in selling it, but I didn't agree with it.”