THE WALL STREET JOURNAL. Monday, October 7, 2019 |B3
Lauren and Kate Spade have
recently called out softness in
their outlet stores, a sign, ac-
cording to Mr. Lejuez, that
they may have opened too
many locations.
“We continue to clearly see
challenges with brick-and-mor-
tar traffic, both full price and
outlet,”Ralph LaurenCorp.
CEO Patrice Louvet told ana-
lysts in July when he laid out
plans to address the issue. Vic-
tor Luis, the former chief exec-
utive of Kate Spade parent
TapestryInc., told analysts inAugust that a decline in foot
traffic led to higher-than-ex-
pected promotions among out-
let retailers.
Just as with traditional
malls, not all outlet centers
are created equal. The best
ones, typically with higher-end
retailers, continue to draw
shoppers by the busload while
others struggle.
Tanger Factory Outlet
CentersInc., which owns 39
outlet centers, posted a 0.3%
decline in net operating in-
come in the first half of theyear because of the effect of
retailer bankruptcies, lease
modifications and store clo-
sures. The landlord posted
96% occupancy at the end of
June, down from 97.7% at the
end of 2016. Over the past
year, shares of Tanger have
fallen by 34%.
Simon Property, which op-
erates 107 malls and 69 outlet
centers among other proper-
ties, doesn’t disclose the dif-
ference in sales and rent met-
rics between its malls and
outlet centers.Outlet retailers are among
the last to venture online, in
part because some of these
chains are high end and don’t
want consumers to be able to
easily search the internet for
discounts that could tarnish
their brand. Shoppremiumout-
lets.com is launching with 24
brands, but Mr. Simon said he
is in talks with dozens more.
“We’re looking at where the
market is going,” and increas-
ingly that is online, said Mi-
chael Rubin, CEO ofKynetic,
which owns Rue Gilt Groupe.Outlet stores had long been
immune to pressures weighing
on traditional malls, including
the shift to online shopping.
Outlet merchandise, typically
last season’s goods sold at
steep discounts, hasn’t been
widely available online. Until
now.
Simon Property Group
Inc., one of the largest mall
owners, in conjunction with
Rue Gilt Groupe, which oper-
ates flash-sale websites, has
launched shoppremiumout-
lets.com, where brands from
Vince to Under Armour offer
their outlet goods for sale on-
line. It is one of the first cu-
rated websites to feature mer-
chandise from outlet stores.
Simon Chief Executive Da-
vid Simon said he isn’t worried
the website will siphon shop-
pers away from his company’s
outlet malls, which include
Woodbury Commons Premium
Outlets, a sprawling complex
in Central Valley, N.Y., with 250
stores ranging from Gucci to
Nike that does more than $1.4
billion in annual sales.
“When you can’t make that
trip to Woodbury, knowing
you can get outlet pricing on-
line makes sense,” he said.
“We think the two will feed off
each other to generate higher
sales.”
Outlet stores were long a
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source of growth for retailers,
which have been hard hit by
the shift to online shopping
and competition from start-
ups. Shoppers flocked to these
centers for bargains they
couldn’t traditionally get at
malls, but now outlets are
showing the same signs of
stress as traditional stores.
There are only about 400
U.S. outlet centers compared
with more than 1,100 tradi-
tional malls, according to the
International Council of Shop-
ping Centers. That means out-
let centers aren’t struggling
against the oversupply that
has plagued traditional malls,
which have seen dozens of
their retail tenants close
stores or go out of business as
more shoppers buy online.
But outlets are feeling the
effects of retail bankruptcies
and the shift to online shop-
ping, too. Chains including
Gymboree and Charlotte Russe
have closed locations in outlet
centers, and Forever 21, which
filed for bankruptcy protection
this week, plans to close
around a dozen outlet stores.
Outlet centers are also fac-
ing stiffer competition from
off-price chains such as T.J.
Maxx and Nordstrom Rack,
which are located closer to
where most people live, as
well as from regular stores
that have cut prices to remain
competitive.
“The proposition of driving
(typically) much further dis-
tances to get to an outlet cen-
ter seems that much less at-
tractive,” Paul Lejuez, a Citi
analyst, wrote in a recent re-
search note.
Retailers including RalphMall Owner
Bets Outlet
Bargains Can
Thrive Online
Simon Property teams
up on e-commerce
site for goods sold at
steep discounts
The new website is intended for shoppers who can’t make the trip to Woodbury Commons Premium Outlets in Central Valley, N.Y.The complex has 250 stores, including Gucci, and more than $1.4 billion in annual sales.GARY HERSHORN/GETTY IMAGES (2)Numberofmallsandoutlet
centersintheU.S.Source: International Council of Shopping
Centers1,20002004006008001,0001970 ’80 ’90 2000 ’10 ’19MallsOutlet
centersMEDIA SPONSOR