Levi Strauss CEO Chip Bergh mentioned Thursday the denims maker is searching for extra space as commercial rental vacancies are up.
The San Francisco-based firm wants to add to its 40 shops and 200 outlet places within the U.S. so as to increase its direct-to-customer operations, the chief mentioned.
“That represents a huge opportunity especially with the, you know, the commercial real estate tsunami that is happening right now,” Bergh advised CNBC’s Jim Cramer in a “Mad Money” interview. Vacancy charges at regional malls rose to a report 11.4% within the first quarter, up from 10.5% within the fourth quarter, in accordance to knowledge from Moody’s Analytics.
“It gives us an opportunity to secure great locations at great leases and we’re capitalizing on that,” he mentioned.
Direct-to-consumer gross sales accounted for about 40% of Levi’s complete income final yr, the corporate mentioned in February. For this yr, Levi wants these gross sales to make up 60% of complete income.
Part of its new retailer roll out is what the corporate calls NextGen Stores. These are designed to be smaller, as little as 2,500 sq. toes, and outfitted with machine studying to assist with stock, Bergh mentioned.
“These really do represent significant opportunities and we’ve declared we’re going to be DTC-led going forward,” he mentioned. “It’s really critical to us, gross margin accretive and we’re successful at it.”
Levi’s direct-to-consumer technique contains its mainline and outlet shops, on-line operations and malls it companions with. Sales within the class dropped 26% final quarter, losses it blamed on much less foot site visitors in its shops.