Levi Strauss CEO Chip Bergh said Thursday the jeans maker is buying more space as commercial rental offers have risen.
The San Francisco-based company plans to expand its 40 branches and 200 branches in the US to improve its direct customer business, the managing director said.
“This is a great opportunity, especially given the commercial real estate tsunami that’s taking place,” CNBC’s Bergh Jim Cramer said in a “Bad money“Interview. The vacancy rate in regional shopping centers rose to a record 11.4% in the first quarter, after 10.5% in the fourth quarter. according to dates by Moody’s Analytics.
“It gives us the opportunity to secure great locations with great leases, and we’re taking advantage of that,” he said.
Direct selling accounted for around 40% of Levi’s total sales last year, the company said in February. For this year Levi wants these sales to represent 60% of total sales.
Part of the launch of the new store is what the company calls NextGen Stores. These are designed to be smaller, only 2,500 square feet, and come with machine learning to help with inventory, Bergh said.
“These are really significant opportunities and we have announced that we will be led by DTC going forward,” he said. “It is really important for us to increase the gross margin and we are successful at it.”
Levi’s direct-to-consumer strategy encompasses the main and outlet stores, online operations, and department stores with which the company works. Sales in this category were down 26% in the most recent quarter, due to less foot traffic in the stores.