Levi's Plans Retail Store Expansion To Take Advantage Of Vacancy 'Tsunami'
Since before the coronavirus pandemic, thousands of retail stores have been closing across the country every year, and something needs to fill them. The biggest U.S. name in denim is looking to be one of those things.
Levi Strauss & Co. is hunting for new locations for its direct-to-consumer stores, CEO Chip Bergh told CNBC's Jim Cramer on Thursday, the same day the company released its better-than-expected first-quarter earnings report. The jeans seller is looking to take advantage of what Bergh called "the commercial real estate tsunami that is happening right now."
“It gives us an opportunity to secure great locations at great leases, and we’re capitalizing on that,” Bergh told CNBC.
As of the start of the year, Levi Strauss operated 40 Levi's mainline stores and 200 outlet locations in the U.S., which combine with sales from its own website and app to provide the brand with its direct-to-consumer sales. Historically, Levi's has depended on wholesaling to partners such as department stores, but Bergh has been weaning the company away from that business line since he assumed the top job a decade ago.
In 2020, direct-to-consumer sales made up 40% of Levi Strauss' revenue, according to the company's earnings report, and Bergh's target for 2021 is to drive that to 60%, CNBC reports.
Many of the new Levi's stores will be what the brand calls NextGen stores, with footprints averaging 2,500 SF designed to run on slim inventories optimized with machine learning. The NextGen model was part of the company's 2019 expansion in the U.S. and has been launched in international markets in the past year, Bergh said on the quarterly earnings call.