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Levi Strauss wants to take advantage of commercial vacancies, says CEO

Levi Strauss CEO Chip Bergh said Thursday that the jeans manufacturer is buying more space as vacancies for commercial rentals are up.

The San Francisco-based company wants to add to its 40 stores and 200 outlets in the United States to increase its direct-to-customer operations, the CEO said.

“It represents a huge opportunity, especially with the one you know, the commercial real estate tsunami that is happening right now,” Bergh told CNBC’s Jim Cramer in a “Mad Money”

; interview. Vacancies at regional malls rose to a record 11.4% in the first quarter, up from 10.5% in the fourth quarter, according to data from Moody’s Analytics.

“It gives us an opportunity to secure good locations with good leases, and we take advantage of that,” he said.

Sales directly to the consumer accounted for approx. 40% of Levi’s total revenue last year, the company said in February. For this year, Levi wants sales to account for 60% of total revenue.

Part of its new store rollout is what the company calls NextGen Stores. These are designed to be smaller, as little as 2,500 square feet and equipped with machine learning to help with inventory, Bergh said.

“These represent really significant opportunities and we have stated that we will be DTC-led in the future,” he said. “It’s really critical to us, the gross margin is accretive and we’m successful at it.”

Levi’s direct-to-consumer strategy includes its main and outlet stores, online operations and department stores with which it collaborates. Sales in the category fell 26% in the last quarter, losses it was due to less foot traffic in its stores.

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