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Retailers ‘don’t need to discount’ amid inflation, Tanger Outlets CEO says

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Tanger Factory Outlet Centers CEO & President Stephen Yalof joins Yahoo Finance Live to discuss the company's earnings exceeding pre-pandemic levels amid inflation and the state of retail.

Video Transcript

AKIKO FUJITA: Well, luxury outlet retailer Tanger Outlets reporting a solid forth quarter earnings. The company seeing traffic at their locations exceed 2019 levels, with the occupancy across the outlets of over 95%. Tanger Outlets operates 36 outlet centers across 20 US states. Let's bring in Stephen Yella. He's Tanger Factory Outlet Center CEO and president. We've also got our very own Brooke DiPalma joining in on the conversation.

Stephen, it's great to talk to you today. We saw this stock down today, although we're seeing a broader pullback in the session. And yet, we're looking at the numbers in the quarter. It certainly feels like retail, at least across all your stores, are back in a big way, not just a rebound from the pandemic, but exceeding pre-pandemic levels.

STEPHEN YALOF: Yeah, I think that's the exciting part of the story. I think being value every day, that's what the outlet format is. We've got a solid customer base. We're introducing our type of retail shopping to new shoppers every day. And our traffic numbers continue to build. But I think where it's evidenced most strongly is on the sales line. And we were thrilled to report this morning in our earnings call that our sales of $468 a square foot is the highest of all time across the Tanger Outlet portfolio.

BROOKE DIPALMA: And Stephen, on that note, speaking of being a value oriented operation, you said that in the call that inflation actually values your channel and a discounted channel overall. So can you break down to us what sort of impact inflation has had on both your tenants and on the foot traffic you're seeing at the outlets?

STEPHEN YALOF: Well, first of all, I think the price points across all retail channels are very high right now. And I think retailers are experiencing great margins because they just don't need to discount at the rates that they've been discounting in holiday seasons past. And that's no different in the outlet channel.

In our channel, although we're on sale every day, those extra take 60 off, take 50 off on certain items didn't exist in the early selling season. Towards the end of the selling season, based on inventory that was in the stores, retailers had a tendency to become more promotional. But we found that the discounts weren't as deep, yet the value is still there every day.

AKIKO FUJITA: You know, no question more and more consumers are seeking out deals, especially as they feel the pinch from higher prices overall. And yet, we've seen a lot of that traffic move towards online shopping as well. And I wonder how you see that breaking down. Obviously, you're seeing a bounceback in foot traffic, but more and more people are opting to shop from home.

STEPHEN YALOF: Well, you know, I think the best way for us to work with online shopping is to participate in it. We're a fully omnichannel retailer. We have a very active membership base, both in our Tanger Club and our Tanger Insiders, that interact with our web and our Tanger app very regularly. It's a great opportunity for our retailers to get their product in front of our customers and essentially give them that chance to window shop.

Through our virtual shopper program that we announced about a year ago, we also gave the customer an opportunity to shop exactly where they are. So if they wanted to shop from home, we facilitated those transactions. But I think the dynamic right now is that our web, our app, our communication, the story that we're telling the customer, getting to know them a lot better, and meeting them where they are is actually pushing our customers into our retail stores.

BROOKE DIPALMA: And Stephen, on that note, I want to talk a little bit about non-store revenue and the opportunities there. You know, in my local outlet, I saw Heineken giving out their new Heineken [INAUDIBLE] Heineken Zero. I was shocked to see it, but it's actually part of a larger strategy at Heineken. You hosted activations from Tesla, Heineken, Unilever over 2021. So what exactly is the opportunity that you see there for non-store revenue?

STEPHEN YALOF: Well, that's a brand new business for us. So that's something that we just stood up about a year, a year and a half ago. And we continue to build on it every day. And in fact, we're investing in that business now. We're building systems to make sure that our inventory is more readily available.

We're building better communication so we can get deeper and richer with regard to our offering. And those activations with national retailers, they just don't do the one shopping center that's closest to you. Multiply that by 36 centers in our portfolio, and that's a real opportunity for them to get into or get in front of the 150 million customers that visit our shopping centers on an annual basis.

AKIKO FUJITA: Stephen Yalof of Tanger Factory Outlet Center CEO and president, good to have you on the show today. And our thanks to Brooke DiPalma as well for joining in on the conversation.