Dive Brief:
- Levi Strauss & Co. expects to ramp down parallel operation of owned and leased distribution centers in early 2026, said EVP and Chief Financial and Growth Officer Harmit Singh on the company’s Q3 earnings call.
- The jean maker reported a 19.5% year-over-year increase in distribution costs for the quarter, per an earnings report. The rise was due to charges associated with the overlapping facilities and reclassification of certain e-commerce costs, per a company spokesperson.
- “Over time, Levi Strauss & Co. expects these costs to decline as the transition is completed and the new network delivers greater efficiency and flexibility to serve both its direct-to-consumer and wholesale channels,” the spokesperson said in an email.
Dive Insight:
Levi’s has been restructuring its distribution network from primarily owned warehouses to a hybrid model that utilizes a mix of owned and leased facilities operated by third-party logistics providers.
After first announcing the strategy shift in 2024, the company has since shuttered an owned facility in Kentucky and entered into agreements with third-party logistics providers for distribution centers in Canton, Mississippi, and Groveport, Ohio. The Mississippi site will replace a facility Levi’s owns.
In the U.S., Levi’s also owns a distribution facility in Henderson, Nevada, while leasing sites in San Francisco and Erlanger, Kentucky, per its most recent annual report.
The goal of Levi’s transformation is to better serve direct-to-consumer channels versus the wholesale side of its business. The DTC channel represents more than 40% of the U.S. market, according to Singh. As Levis’ prepares for the next phase of its distribution model transition, it anticipates distribution expenses and costs per unit will decrease, Singh said.
Levi’s is advancing the transformation under new leadership, with Chris Callieri taking over as SVP and chief supply chain officer in September.
A former Victoria’s Secret supply chain executive, Callieri inherited responsibilities for global supply management at Levi’s from former COO Liz O’Neill, who retired this year.
