Tanger Outlets CEO Stephen Yalof joins Yahoo Finance Live to discuss company earnings, robust growth, investor sentiment, leasing momentum, consumer spending, trends, and inflation.
Video Transcript
- The outlet mall concept is still alive and well, if Tanger Outlet's earnings are any indication. The company had another strong quarter, led by robust growth and steady leasing momentum. Joining us now is none other than Tanger Outlet's CEO and President Stephen Yalof. Stephen, thank you for joining us here today. Just review some of the highlights from your earnings announcements, the message you'd like investors to hear.
STEPHEN YALOF: Well, you know, first of all, I love that you said that the outlet business is alive and well. It is. You know, the interesting, the narrative on the outlet business is these shopping centers that are quite a drive away, with value-priced goods. For us, the outlet center business, we've moved much closer to the cities. We're building a shopping center right now in Nashville, Tennessee, which will open in September of this year, 12 miles outside of Nashville.
The outlet retailers are really changing and evolving. A lot of new brands are getting into the business. So what you might have seen 10 or 15 years ago has completely evolved, direct-to-consumer brands, better food and beverage offering, and even entertainment offerings, better amenitized space, so that when you come and you shop at one of our shopping centers, you want to stay for a much longer time.
- Are you guys benefiting from what we're seeing, to some degree, as a trade-down effect for consumers right now, who are trying to save money in this big inflationary environment?
STEPHEN YALOF: You know, what's interesting is, when we talk about trading down, we actually look at an outlet center and say, a lot of the customers actually have an opportunity to trade up, because we have a very aspirational customer. That aspirational customer may only have a certain amount of disposable spend that they want to spend on brands, and when they come to an outlet center, it's always going to be the best price every day on the brands they want. So they can trade up to a Ralph Lauren, trade up to a Lululemon, trade up to a Michael Kors, a Coach, a Kate Spade, which we have on sale every day in our centers.
- Are they doing that as much right now?
STEPHEN YALOF: Well, we see that happening. In fact, the accessories and the dress for work categories, which are some of the more fashion-oriented brands, those are the ones that at least in the last quarter, and that momentum is carrying on post-Christmas and into January, with some of the dress to work and more dressier and accessory type brands, so we're seeing great momentum in those categories.
- And just wondering, you mentioned some of these trends that you're following here. What else are you seeing in terms of the shift of consumer habits, as people finally reorient to a post-pandemic, kind of hybrid, sometimes going to the office, sometimes staying at home, as it would have it, that kind of environment?
STEPHEN YALOF: Well, first of all, our outlet centers, like I said, regardless of geography, a lot of the centers that we've built are in places like Myrtle Beach, South Carolina, Hilton Head, Daytona Beach. These markets are markets where folks have second homes, and now, in this flexible work environment, people are staying in those geographies a little bit longer. So we're seeing those shoppers come and visit us more frequently.
When they do, they're looking for a much different experience when they get there. So, as I mentioned earlier, instead of just that power shopping experience that was the outlet shopping of 10 or so more years ago, now they're looking for a much more elevated experience when they're there.
So we've added a number of restaurants, and like I said, a Dave & Buster's, so that, when that carload of people come and visit our shopping centers, there's more for the consumer to do than just shop. There's other amenities, and like I said, it keeps them there longer. The longer they stay on property, ultimately, they'll build bigger baskets and spend more money.
- Cool. I have a couple of questions for you. We were just showing your occupancy levels, which are enviable compared to the traditional mall business, I think. Tell us about that, why that is.
STEPHEN YALOF: Yeah, you know, during COVID, we lost about a million square feet, and with that, we lost a number of legacy retailers that were in pretty much all the outlet centers for years and years. And, you know, frankly, it was time for those retailers to sort of bow out of that business.
We've since replaced them with those other categories that I was talking about, whether it's food and beverage and entertainment uses, but there's also a whole handful of new retailers that are entering into the outlet space, predominantly the direct-to-consumer brands and home furnishing brands. So we're seeing more Restoration Hardware, Design within Reach. Crate & Barrel opened up in the outlet space, in the outlet category, meaning that they're selling goods that have been returned, goods that the manufacturer--
- Well, I want to ask you about that, actually, because there seems to me, as a shopper, to have been a shift in the outlet business in the past even 20 years, right, where a lot of the merchandise now is purpose-manufactured for the outlets, rather than the traditional outlet business, which is returns, stuff they couldn't sell. Is that shifting back again, especially right now with the over-inventorying that we have seen? So is that benefiting you guys and your tenants, that they're getting that over-inventory?
STEPHEN YALOF: Definitely. So we gave seen, in the past, I would say, one or two earnings cycles, that a lot of the retailer brands, the larger brands that have positions in our shopping centers have reported that they'll be using the outlet channel to clear a lot of their excess inventory, so that they can keep their full-price channels a little bit cleaner. That definitely benefits us the more inventory in the stores, the more promotional they are, the more I can draw a bigger catchment of customers to come and shop in our shopping center.
That's really what it's all about. Everyday value pricing in our centers, that's what the customer wants. That's what they aspire to, and when you bring an aspirational customer into an environment where they can buy brands that they always saw themselves purchasing, at a price that they can afford, it could convert them into a customer with that brand for life, and that's also a strategy of a lot of our retailer partners.
- Stephen, thanks for coming in.
STEPHEN YALOF: It was my pleasure. Thanks so much for having me.
- Interesting stuff. Stepgen Yalof, thank you so much. Appreciate it. Head of Tanger Outlet.
