Vera Bradley, Inc. (NASDAQ:VRA) Q2 2020 Earnings Conference Call - Final Transcript
Sep 04, 2019 • 09:30 am ET
that we're just very focused in there. Our strategy behind department store selling was always about new customer pickup and new customer acquisition. And so as we're looking at that, we think we are going to continue to fine-tune the store counts. In other word might be tightening up that store count to make sure that we're focusing on the most appropriate stores and the stores that can really bring an additional new customer to the brand. So that would be the second piece.
And then the third piece, I think becomes the rest of the channel. Our Amazon business is performing very well. We're excited about what's happening in the e-commerce side of the wholesale world so we're going to continue to expand in that area. And then lastly, the smaller piece of our business, but in liquidation that there is definitely a lot of liquidation handbag product we have in the market today. And so there's definitely some pressure on that side of the business in terms of availability of liquidation, but for us, that's okay, because we've been pulling down our clearance, we've been focusing less on it, but there is some pressure on that side of the business also.
Yeah. As we think about what's happening in the industry, I would love your thoughts on traffic and traffic trends and volatility across a full-price versus outlet, as well as the thoughts on liquidation, it's been very promotional in the marketplace. What are your expectations for how your merchandise margins may trend?
From a traffic perspective, we're seeing from a full-price perspective, we're seeing a little bit softer than kind of our factory business, but ultimately we anticipated that when we put together our forecasts in our plan. So traffic has been down roughly about 4% year-over-year. If we think about kind of our merchandise margins as we move forward, I don't anticipate significant changes from the first half of the year, in regards to how promotional we're going to be in the back half of the year, so I would think as we've built into our forward-looking guidance for the third quarter and then for the year, we've taken consideration to how we look at our promotional activity as well as some of the input costs in any shipping costs associated with that. So I think we've kind of we feel more comfortable ultimately with our margin coming through the second quarter and the impact, as Rob mentioned in the call is -- remarks in -- for GSP, the benefit we'll see kind of in the back half of the year most significantly in the fourth quarter for the GSP margin.
I think the only thing I would add to it, John, as we talk about our marketing team and our data science team and becoming more and more analytical, one of the areas that we're definitely placing a lot of that analytical focus is in the promotional effectiveness. How do we really fine-tune the promotional