Chip Bergh, CEO of Levi Strauss, said Thursday the jeans maker was buying more space due to commercial leasing vacancies.
Executives said the San Francisco-based company wants to add 40 stores and 200 stores in the United States to increase direct operations with customers.
“That represents a huge opportunity, especially with the current commercial real estate tsunami,” Bergh told CNBC’s Jim Cramer in an “Mad Money” interview. In the region, it rose to a record 11.4 percent in the first quarter, up from 10.5 percent in the fourth quarter, according to data from Moody’s Analytics.
“It gives us the opportunity to maintain a great location with a great lease, and we’re taking advantage of that,” he said.
Direct-to-consumer sales accounted for about 40 percent of Levi’s total revenue last year, the company said in February.For this year, Levi wants those sales to account for 60 percent of total revenue.
Part of the new store launch is what the company calls NextGen Stores.These are designed to be smaller, at just 2,500 square feet and equipped with machine learning to help store Bergh inventory. say
“These represent a really important opportunity and we have announced that we will lead the DTC in the future,” he said. “It’s very important for us, the gross margin has increased and we have been successful.”
Levi’s direct-to-consumer strategy includes major and affiliated merchants, online operations and department stores. Sales in this category fell 26% last quarter, resulting in fewer people walking into the store.