Bear of the Day: Tanger Factory Outlet (SKT)

Tanger Factory Outlet Centers, Inc. (SKT) has found itself caught in the coronavirus pandemic as its centers closed around the country. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall 28% in 2020.

Tanger Factory Outlet Centers is a REIT that owns and operates 39 upscale outlet shopping centers in 20 states and Canada.

It has leased out over 2,800 stores.

A Business Update as the Economy Re-Opened

On June 15, Tanger gave a business update as mandates had been lifted or eased and in-store shopping was again allowed in all 39 of its outlet centers.

The vast majority are open air centers.

As of June 14, open stores represented 72% of total occupied stores in the portfolio and 69% of pre-COVID-19 annualized base rent.

Weekly traffic exceeded 85% of the prior year levels.

At the centers which had seen in-store retail for 30 days or more, weekly traffic exceeded 90% of the prior year levels and open stores as a percentage of total occupied stores was approaching 90%.

In June, the shoppers were returning.

But since this business update, the company has not put out another one in July. It is due to report second quarter earnings results on Aug 5.

2020 Earnings Estimates Are Cut

The analysts have been bearish on 2020 over the last 90 days.

2 estimates were cut during that time and the Zacks Consensus Estimate has fallen to $1.64 from $1.79.

That's an earnings decline of 27.8% as Tanger made $2.27 a year ago.

Shares Remain Below Prior Highs

Tanger's shares have bounced off the coronavirus lows but still remain down 54% year-to-date.

The shares remain cheap, on a P/E basis, with a forward P/E of just 4.

But the dividend was suspended in May and remains suspended, for now.

This is a difficult time to own a shopping center REIT. Be sure to tune into the earnings calls for companies in this industry this earnings season.

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