Tanger Outlets CEO sees rebound in retail

Tanger Outlets CEO and President Stephen Yalof joins Yahoo Finance Live to discuss the state of the consumer, pricing, growth trajectory for retail, and the outlook for Tanger Outlets.

Video Transcript

SEANA SMITH: We've been tracking the state of the consumer all week on Yahoo Finance. And as we've heard, CEOs are raising some caution about how shoppers are spending their money, especially trading down. And that trend could be good news here for our next guest.

Joining us now, we want to bring in Tanger Outlets CEO Stephen Yalof. Stephen. It's great to see you here. So that has been a theme-- consumers trading down. I would imagine that that's probably good for your business. What are you seeing?

STEPHEN YALOF: Well, again, the shopper is there, but they're definitely looking for value. And that's what you get when you shop in our shopping centers every day. We are a value platform, but for brands that people seek.

So we're not selling commodity priced goods at the cheapest price. We're selling great international and national brands every day at the best possible pricing. And the customers are seeking that. And we're meeting them where they are.

AKIKO FUJITA: Yeah, I mean, what have you seen anecdotally in terms of foot traffic, in terms of bringing new consumers on board? Because to Seana's point, we heard from so many of these retailers saying we're seeing higher end consumers trade down. We're also seeing additional like consumers that are maybe on the lower end mixing up what exactly they're purchasing-- not as much for discretionary items. I mean, give me an anecdote of what specifically you're viewing in your outlet.

STEPHEN YALOF: Yeah. Well, first of all, in general, I think the retailers that are winning are the ones that are discounting deepest. And that's in the apparel. We're seeing the same thing in accessories.

If you're an accessory retailer and you're discounting right now, you're seeing a lot of customer traffic in your shopping center, in your stores. Similarly in the athletic brands. We heard the news about Foot Locker today.

But what we're seeing is slightly different. We have Nike stores, Adidas stores, Puma stores, and where they're being-- where they're offering the consumer those famous brands that they love at the best possible price, we're seeing the customer respond and shop there.

SEANA SMITH: Stephen, I'm taking a look at your investor presentation today-- 96.5% occupancy levels. Pretty impressive given this environment. We certainly have seen the rebound in retail. What do you think the growth trajectory, then, looks like here from here on out given the fact that how consumers are shopping continues to change?

STEPHEN YALOF: Well, first of all, we'll be going to ICSC. That's the council-- the shopping center council. Meetings will be held in Las Vegas this week. And from what I understand, it will be probably the best attended ICSC in years, meaning the retailers are out in force and the developers are there.

We're meeting with them on a regular basis. They're coming in with open to buys and looking to build their store counts in our portfolio. There's a number of retailers-- we had a discussion about this this morning-- a number of retailers in our portfolio who had been on the sidelines for the past two or three years that are now very actively pursuing building their stores, particularly in the outlet space, because that's where they see the consumer coming to shop.

AKIKO FUJITA: You know, Stephen, you were running through some of the brands that you've seen do particularly well when you think about your outlets, but we've also heard about the shift over and over from goods to services-- that services are where consumers are willing to spend the money-- or the additional money that they do have. Are you seeing that shift?

STEPHEN YALOF: We are. And I think that that's a trend that we've seen for the last, I would say, two or three years. Folks traditionally would come to an outlet center to shop when they're looking for that power shopping experience-- great brands, great value. But what we're finding is that they're staying for lunch, and they're staying for meals, and they're staying for entertainment.

And we're providing all of those uses in our centers as well. In fact, the sign went up yesterday in San Marcos, Texas for our first Shake Shack. So we're excited to bring that into the market. We're under construction across our portfolio right now for two Dave and Busters, because we think that there's a customer who wants to come and do something other than shop when they're in an open air environment like a Tanger shopping center. And we want to bring them those uses as well.

SEANA SMITH: When it comes to the rents, what you're able to charge here, is that consistently increasing? And do you see that trend sticking?

STEPHEN YALOF: Well, yeah, we reported in our last quarter that our rent spreads, which is the indication of how much more rent we're getting from the previous tenant, they continue to go up. And we've grown our rent spreads for eight consecutive quarters now-- and the last quarter being the highest growth that we've seen so far.

SEANA SMITH: Is it the case across-- regionally speaking as well? Or are you seeing strength in certain areas?

STEPHEN YALOF: Well, I would say the stronger demographic and the stronger market that we're seeing right now is in the South. But I think a lot of that will pivot now that the summer months are coming to the North. We're primarily an East Coast shopping center company. We do have centers in Texas. And we do have one central in Arizona, which happens to be one of our best performing centers in our portfolio right now.

SEANA SMITH: All right, Stephen Yalof, the CEO of Tanger Outlets, thanks so much.