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

Levi Strauss CEO Chip Berg said on Thursday that the jeans maker was shopping for more space as vacancies for commercial rents increased.

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

“This is a huge opportunity, especially with the, you know, commercial real estate tsunami that’s happening right now,” Berg said in an interview with CNBC’s Mad Money. The vacancy rate in regional malls rose to a record 1

1.4% in the first quarter, compared with 10.5% in the fourth quarter, according to Moody’s Analytics.

“This allows us to provide great locations on large leases and we take advantage of that,” he said.

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

Part of its new store is what the company calls NextGen Stores. They are designed to be smaller, smaller than 2,500 square meters, and equipped with machine training to help with inventory, Berg said.

“This really represents a significant opportunity and we have declared that we will be guided by the DTC going forward,” he said. “This is really critical for us, the accretion gross margin is successful and we are achieving it.”

Levi’s strategy directly to the consumer includes the main stores and stores, online operations and department stores with which it partners. Sales in the category fell 26% in the last quarter, with losses due to lower store traffic.

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