Levi Strauss CEO Bit Bergh said Thursday the jeans maker is shopping for more space as commercial rental vacancies are up.
The San Francisco-based circle wants to add to its 40 stores and 200 outlet locations in the U.S. in order to boost its direct-to-customer operations, the executive said.
“That part ofs a huge opportunity especially with the, you know, the commercial real estate tsunami that is happening right now,” Bergh stated CNBC’s Jim Cramer in a “Mad Money” interview. Vacancy rates at regional malls rose to a record 11.4% in the first rooms, up from 10.5% in the fourth quarter, according to data from Moody’s Analytics.
“It gives us an opportunity to secure true locations at great leases and we’re capitalizing on that,” he said.
Direct-to-consumer sales accounted for about 40% of Levi’s unalloyed revenue last year, the company said in February. For this year, Levi wants those sales to add up to up 60% of total revenue.
Part of its new store roll out is what the company calls NextGen Stores. These are devised to be smaller, as little as 2,500 square feet, and equipped with machine learning to help with inventory, Bergh bring up.
“These really do represent significant opportunities and we’ve declared we’re going to be DTC-led going forward,” he said. “It’s really touchy to us, gross margin accretive and we’re successful at it.”
Levi’s direct-to-consumer strategy includes its mainline and outlet stores, online machinists and department stores it partners with. Sales in the category dropped 26% last quarter, losses it blamed on less foot traffic in its set asides.