Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Chris Svezia – Susquehanna.
Chris Svezia – Susquehanna
When you came through the last conference call you guys felt pretty optimistic about your thoughts regarding the second quarter for flat revenues for the wholesale piece. I’m curious what point did it start to deteriorate and secondarily to that you have some new products we saw at WSA you talked about some of the things going on at Naturalizer and what you’re seeing there and obviously some of the new brands. Given the status of the department store channel which seems to be very cautious here in the second half how much confidence to you have that you’ll be able to hit those targets that you’ve now laid out for the wholesale piece.
Diane Sullivan
It’s a great question and not an easy one to really answer when you think about trying to forecast what the consumer is going to do in the future given this kind of environment. Maybe I’ll reiterate a little bit about what we really thought about the second quarter and what we experienced. I think clearly that the overall trend in traffic and the amount of promotional activity that happened across the entire landscape was much more than I think anybody had anticipated which had pressure across our entire wholesale segment to begin with.
The second piece of it would be that as I mentioned in our traditional brands both Naturalizer and LifeStride not only did they have some of that pressure but they did have some other issues that were inherent to the shift in moving our product in Naturalizer to more casual and tailored offerings so we had called that out as something that we needed to do that we felt would be turned around more in the back half of the year and I think we’re on track to do that. I also think we learned a lot in the quarter on our LifeStride business as we really began to see that the suite spot to that brand was truly at the $39 and $49 price point because that’s really what the consumer is looking for more and more value that seemed to be a really great place to be.
Those are a couple of the things probably worth reiterating. During that time period too, second quarter we typically rely on a number of immediate so immediate reorders against a number of our businesses and clearly that did not come in where we had intended it to given the environment. All in all it was really about how you find the right balance between making sure you’re not over shipping and overselling but making sure that you’re delivering as much overall market share and profitability that we possibly could. I think it’s a delicate balance and as we look towards the third and fourth quarter we’ll have to see. I think it’s our best guess as of right now and we continue to work really hard against the pipeline that we talked about whether it’s with Fergie and Fergalicious to get us into new channels and new customers as well as with Vera Wang and the Lavender label and a number of other initiatives throughout the company. It’s really a mix of all those pieces.
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