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Jun 23, 2009
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Mid-priced department stores mull outlet idea

By
Reuters
Published
Jun 23, 2009

By Aarthi Sivaraman

NEW YORK (Reuters) - Mid-priced U.S. department store chains are beginning to eye the outlet store concept, which has worked for their upscale rivals, the chief executive of Tanger Factory Outlet Centers Inc (SKT.N) said on Tuesday 23 June.


La Blanca swimwear at Nordstrom

Higher-end department store chains like Saks Inc (SKS.N) and Nordstrom Inc (JWN.N) already operate shops -- Saks OFF 5th and Nordstrom Rack -- that sell designer brands at 40 percent to 60 percent off regular prices.

Outlet stores have attracted more shoppers in the recession because saving money, even when buying high-fashion brands, has become a top priority.

"There are other department store chains now, more moderate, looking at setting up an outlet distribution channel," Tanger CEO Steven Tanger said at the Reuters Global Real Estate Summit in New York.

"You can assume that we are talking to most of them. I really don't want to name names because then I will forget someone."

Tanger is one of the largest owners and operators of U.S. factory outlet centers.

Other department store chains based in the United States include Macy's Inc (M.N), with its namesake and Bloomingdale's chains, J.C. Penney Co Inc (JCP.N), Kohl's Corp (KSS.N) and Lord & Taylor.

A Macy's spokesman said the company was "looking at" the outlet store concept for either or both of its chains but had not reached any conclusions. He declined to elaborate.

Outlet stores have been a bright spot for upscale retailers, who have taken a big hit to sales in the recession.

Saks reported a 27.6 percent drop in first-quarter sales at stores open at least a year but said its OFF 5th outlet locations "continued to show relative strength."

Saks expects to open three to five outlet stores annually going forward. It currently has 52.

"The outlets have become a channel of distribution, and not a clearance channel," Tanger said.

Other retail brands with outlet stores at Tanger centers include Limited Brands (LTD.N) Victoria's Secret and Bath & Body Works, Barneys New York, Gap Inc's (GPS.N) Banana Republic, and Neiman Marcus' NMRCUS.UL Last Call.

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