Chip Bergh, CEO of Levi Strauss, said on Thursday that the jeans manufacturer is buying more space as commercial rental vacancies become operational.
The San Francisco-based company wants to add to its 40 stores and 200 outlets in the US to increase its direct operations to customers, the executive said.
“This is a huge opportunity, especially with, you know, the commercial real estate tsunami that’s happening right now,” Bergh told Jim Cramer of CNBC in a “Crazy Money” interview. Job vacancies at regional malls rose to a record 11.4% in the first quarter, up from 10.5% in the fourth quarter, according to data from Moody’s Analytics.
“It gives us the opportunity to provide excellent locations at excellent leases and we capitalize on that,” he said.
Direct sales to consumers accounted for about 40 percent of Levi’s total revenue last year, the company said in February. For this year, Levi wants these sales to represent 60% of total revenue.
Part of the launch of the new store is what the company calls NextGen Stores. They are designed to be smaller, just 2,500 square feet, and equipped with machine learning to help with inventory, Bergh said.
“These are really significant opportunities and we have stated that we will continue to be led by the DTC,” he said. “It’s really critical for us, the gross margin is growing and we’re successful in that.”
Levi’s direct-to-consumer strategy includes its main and retail stores, online operations and department stores with which it is a partner. Sales in this category fell 26% in the last quarter, which was due to lower traffic on foot in its stores.