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Simon Property Group, the largest mall owner in the US and a parent company of fast fashion brand Forever 21, reported on Monday that retailer sales per square foot declined 1.3% YoY in the last quarter of 2023.
However, CEO David Simon told investors that product returns are distorting these numbers: “These are the sales that our tenants are reporting to us, but they are somewhat affected by returns,” he said. “We actually think our sales per [square] foot are higher than this.”
Simon added that he’s generally optimistic about the majority of the investment trust’s retail tenants, noting that their “credit is in really good shape.”
“There’s always one or two or three tenants that we are somewhat nervous about,” he said. “But they all understand the importance of bricks and mortar. They’re reinvesting in their stores.”
This tracks with what appears to be an industrywide push to upgrade physical stores: “They’re spending less on technology, which is good for us, putting more money back in the stores.”
Simon Property Group, meanwhile, is investing in technology itself to lure shoppers. Simon, the CEO, highlighted new technology such as Simon Search, which is a digital interface for discovering what products are available across an entire mall’s inventory.
Looking at the bigger economic picture, Simon noted that low-income consumers are still feeling pressure from “embedded” inflation despite a recent slowdown in price increases.
“Their income is increasing, but it’s still not in a position that they have the discretionary income that they need and they deserve,” he said. “And we need to figure that out as a country.”