Levi’s is outsourcing more of its logistics capabilities as it pivots further toward a DTC-first mindset.

The global denim brand said it is shifting its primarily owned and operated distribution and logistics network in the U.S. and Europe to “one that will be more balanced between our own and leading third-party logistic providers,” chief financial and growth officer Harmit Singh said during a June 27 earnings call.

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Singh said the new hybrid strategy allows Levi Strauss & Co. to secure logistics investments “in a capital-efficient manner,” by leveraging third-party logistics firms (3PLs), thus freeing up the company’s own resources to invest in growing its direct-to-consumer (DTC) channel.

“This will also enable us to reduce our fulfillment costs per unit compared to running the facilities ourselves,” Singh said. The CFO noted that the switch would immediately deliver a cash infusion of over $90 million this year, primarily as a reimbursement of the capital spent to build a new distribution center in Dorsten, Germany.

The company invested $48 million in enhancements to its 575,700-square-foot facility in Erlanger, Ky. last July in another attempt to fortify its DTC plans. That building specifically fulfills e-commerce orders for customers in the Eastern U.S. and is designed to lighten the load for other facilities in Hebron, Ky., Canton, Miss., and Henderson, Nevada warehouses by housing inventory from those locations, if needed.

Growth plans in the DTC channel seem to be on track for Levi’s. In the company’s second quarter, DTC saw sales increase 11 percent on a constant-currency basis to $672.5 million, reflecting nine consecutive quarters of comparable sales growth.

DTC comprised 47 percent of total net revenues of $1.44 billion in the second quarter, up from 43 percent throughout 2023. The company is aggressively targeting wider growth in the channel, setting a target for 55 percent of sales in 2027.

Singh did not specify which locations the 3PLs will fit in going ahead, and Levi’s has been quiet about which partners it is referring to when it comes to outsourcing distribution and logistics capabilities, particularly in the U.S. However, it recently unveiled one of the companies set to assist in its European operations.

In early June, contract logistics provider GXO took on the responsibility to manage operations at the newly opened, fully automated, 750,000-square-foot Levi’s distribution center in Dorsten.