Lulu's Fashion Lounge (LVLU) 1 Apr 222021 Q4 Earnings call transcript

Good afternoon, and welcome to Lulu’s Fourth Quarter and Full Year 2021 Earnings Conference Call. Today’s call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I’d like to turn the conference over to Naomi Beckman-Straus, General Counsel at Lulu’s. Thank you.

You may begin

thank and joining full and Lulu’s to everyone, quarter fourth year afternoon, you us for discuss Good XXXX results.

to we but will to historical considered within on this begin, plans, this objectives. matters Act of Private of we would that not expectations, statements remind Reform statements, statements to strategies, forward-looking Before made All you Securities conference regarding Litigation call be meaning do include fact and the statements call limited should XXXX. forward-looking management’s including of the like that goals, not relate

as Our and quarter which initiatives, expressed statements, on differ future implied release assumptions market important detailed materially XXXX. our cause other and January performance pursuant in or expectations this opportunities, uncertainties regarding XXX(b)(X) with year to XXXX, assumptions, these SEC the prospectus by growth, are financial factors achievements SEC filed results. could XX, subject Outlook these well for X, filings to results, or results, press other our and actual and to performance, These the risks, product various or including and our are our Rule launches from afternoon’s uncertainties, final ending November risks, with the achievements statements. as

can All management’s such forward-looking estimates website found statements be of call. at which represent of date as our on investors.lulus.com. this Any of the

such at as to point some except update statements law. in we forward-looking or to update or revise obligation elect any undertake by future, may no we forward-looking While required information, the statements

to some the operational margin use to business. accurately The superior performance and non-GAAP substitute financial financial adjusted today, intended believe presented financial GAAP. discussions in reference non-GAAP isolation of presentation including information adjusted information information non-GAAP considered of with and accordance true will results represent for as financial and debt. EBITDA in or or not a more the prepared also is we net call our our they We we measures in of is During EBITDA, certain be this underlying our

different of measures, non-GAAP and used in SEC the be be non-GAAP each Reconciliations description, from filing. measures afternoon’s to release other non-GAAP may this using for and in press companies. can by our Our measure rationale measures found as well limitations as GAAP

Joining call our and Co-President is CEO, David our me CIO, on CFO, Co-President the Mark Landsem; today McCreight; and Vos. and Crystal

open remarks, With our Following the over that, for call we’ll the questions. prepared I’ll your call to David. turn

I as an Thank Mark partners you, with am a everyone. quarter my Naomi, Co-Presidents, and you public exceptional good and first company. newly had address We’ve Crystal. afternoon, today to proud and

completed milestone paid As success are well-positioned our us past beyond. through and fourth you debt. know, we to quarter our IPO behind With long-term our momentum that balance strong sheet, fully a XXXX during on and this and we build off and

growth revenue, During versus deficit and generated QX, a a quarter. year-over-year $XX.X of fourth we adjusted $X.X million of our of XX% $XXX,XXX a million prior EBITDA year’s over about was

adjusted which XXX% our from year, XXXX. XX% revenues $XXX million, EBITDA our the $XX amounted million a and For represented to gain to increased

and brand categories and to delivering efforts with continue achieved response based marketing non-event in growth it that impressive new customers million. by the accomplished from to more our $X.X experience tremendous fans. reaching with a was active and by both We is we perspective, encouraged dramatic despite a All more activity. is are marketing customers performance the thrilled relevant product efficient offerings be and even and efficient our reduction our brand demand Clearly, with combined both spend, appreciably growth. again repeat assortment double-digit event merchandising promotional in From resonating our with FYXXXX broad

closet material ways to inner by continues dressing non-event to category, event pivotal and We our make team categories. inroads further have identified our evolving expand our

driven digitally fashion both KPI where plan LVLU social for moment robust vital is strong product are future fashion the for her and the affordable Millennial women and helpful which growth direction return our and underscore new our price data and activities all but offers point. model, targets algorithmic product data pipeline achieving for use tailwinds revenue XXXX pre-pandemic brand to is Z strong product native of our and to to results guides from a on in almost providing and beyond. Gen excellent our fresh at more in deliver We’re to elements of placement, attractiveness We These an FYXXXX technology The – this all is throughout than and XX% planning to the our fans results creation optimize curation company making of in business. of pronounced win nowhere from and decision by using purchasing. of About our logistics almost marketing cycle.

tests to where graduate styles Our a nearly XXX% the as enters order reorder approach of our quantities, reorder assortment learn small in test then successful and algorithms.

introductions our stay customer model mouth own risks, pulse will connected with and our I as word customer channels she her and drives with the Lulu’s of increased through about works to increases service capability day leads reviews, for a online We well refined engaging customer decreases guidance special, platforms excitement financial by customer of social Our is surveys, touch exceptional of detail, perspectives. still throughout and digital years interactions our every express I year in over The community on which outlook stronger XXXX this both loyalty one-on-one our our and make profitability. into points feedback to wanted my LuCrew ultimately to team. greater where growing fans. but as reduces engagement fashion media, delve from markdowns brand and to and

north being revenue invest rise above to growth EBITDA the million are while even FYXXXX, costs continuing For XX% to $XX targeting growth incurring of a and company. net and public we for newly adjusted of

pressures to of inflation. keenly are ever the mounting of chain on present invasion aware uneasiness about strains Russia’s supply due markets the Coronavirus to the the new We and headlines in Ukraine, impact

market relate to a they If the over I’d Lulu’s. you don’t to the how like address mind, clouds and few of

stages. for The as We from air state infections inflation. and we to previous not is less supply have Firstly, the we What the supply where XXXX, early great of time traffic despite of orders less about was recent chase pre-pandemic reorders scrambling time variant But company, so we small many delays. expect others change trend The the are as product market The chain so risk, remain or than much for the global now results due earlier we previously confidence because the with weeks and outbreak ever Moreover, in Omicron for and we the that our also are to vast additional balance chain, our of in posted sensitive is chains a brand longer impact of during general is constraints quantity we impede orders or position season lead articulated model about are conversion compensate, our for product. we current freight. not constraint continue place status case our in year. of four the fatigue and constraint, evolving others fast unlike lead times. To does to for the still supply or weeks, these majority the ability the tested placed of are perhaps Coronavirus and material vaccines in this recognize have in safety does Delta exceptional pandemic, did protections most however to not increase not Coronavirus. notice products. fashion the as this a immunities

of sight lines inflationary P&L our We line first decent pressures the impacting are most XXXX. of aware of into and half of have a for

anticipated shaping pressures and materials We And XXXX. we throughout shipping, expect are those Guidance to marketing affordable there to visible our Notwithstanding to the testing quite product our offset of and be accounts in how we we still continued to pleased to quarter reduce for the which though, shopping beyond labor, to continues And macro robust. to the accessory looks and seem sectors we providing of to have is where of indicates inflation. digital up. indicate disruptive brand the the business And concerns, provides are and FYXXXX momentum. room digital in is luxury, these metrics Demand for today model some first XXXX in ample footwear increases. pressure shift frequent with move regained monitor those Many we’re costs on from apparel, to transitory have degree positioned continue channels. informed near-term pricing structural, of headwinds. costs power, protection much we consumer strong any inflationary have the

her economics. I’d our makers our brand new insight, file guidance on Customer confidence customer we share helping year. guidance. pleased initiatives our seen basket and and to our few a resources on and we’ve mindset fans, quality key and we year find our brand have We desires collection. decision thus data existing increasing the with dedicate our our for and understand delight to delight To to our deliver this of far, like XXXX value in trends first the Based party our to of will lifetime more continue better fans, are the ways

We brand dominate insights customers we based engagement capabilities vast meet and performance better continue from but Lulu’s are and are mindshare are to less dressing. building with the revenue to and word who event her moves can we expansion. untapped opportunity, there her own more our engagement. testing, the has by will introduce learn and our XXXX, this in while engagement marketing new Product positioned shape rigorous meaningful XXXX our more ahead. Next, brand. from to – provide Many only we frequent to know customers optimistic file on she of introduction know brand of occasions. our it encouraging even have expand of mining when results discussing dressing Lulu’s successfully XXXX our Said in seen closet years more the awareness as and we through of have frequent continues for to pools event brand into introductions, Conversion. yet will differently, about in brand non-event dressing to we growth accelerated mouth fans Not cautiously come to work started

XXXX, we on-site or even our support ratios. impacts. environmental our conversion and it and customer of waste, in size and at have to analysis, are conversion environmental increasing our of committed experience deeper Lulu’s. our reducing out insights overall stakeholders Whether We funnel stock women reducing In social improve ESG. frequent more important and always social a been satisfaction to will to with more issues and into internal invest for is goal

third-party to allocation modeling of in and have journey. impressive look our innovation. plans demand. Chief more tech analytics, architected bunch analytics and for Mark to optimizing we But stewards. to better is key continue and discuss strategies. our engagement. as for Information to We distribution in engaged you business as share of advance the driving marketing Mark? practices decisioning approach and forward an opportunities of we Officer of future DNA detail. already to and like and and We current machine invest support his better He efficiency algorithmic in have further greater part initiatives of our learning over ESG evaluate turn and stack with insight team sharing can an technology, technology Mark making. our already spend new growth co-President call product and Lulu’s customer We to Technology and Vos, as areas decision have revenue we become will our the will the partners and well I identify increasing efficient progress in already increase XXXX, our distribution even open our system of in will now ways logistic to some grow much

everyone and David, you, thank Thank for joining today. you us

our chain. and we supply levels QX these from In of operated XXXX, will efficiency delight our infrastructure our supporting objectives. step developing key continue be improvement on a to key operations Lulu’s started We continuous service continuing our delight focused affordable positioning our are A in is facility, across and plans new which our Southern enabler long-term luxury relentlessly California and achieving to growth customers. customer our in

Pennsylvania was inventory in-house, year as our receiving optimizing we fulfillment activities Southern first back to centers. in our this well California Northern and taking which product our California, control milestone, vendor QX as The Eastern quality shipments from and completed inbound of

observed per transportation already per units shift the unit. to have fulfillment centers, reduces trailer We higher cost which our

our expense Throughout dock add California to across and shorter for available additional time Pennsylvania our of improves and provide and at logistics only robotics sale of center. started in optimize inventory In help with but product well further us will expect a us times, improving environmental Eastern XXXX, as gains, network, lower our impact. capabilities not shipping to also facility fulfillment productivity better our Robotics and QX also will to season implementation our further a lower after XXXX, successful our available observed also And attract for ultimately in robotics associates. sell XXXX our our have in markdowns. optimization to implementation which and warehouse allocated order a as consider service California seasonal in retain logistics we Southern guidance. CapEx which budget cycle We Northern phase, a rollout to center we is levels we thereby fulfilment

in impacts, products further follow do. is XX% year gross previously As This for sales a In our approximately David generated all everything And tested From was risk. evident our products attributable by XXXX. customers. mentioned, XXXX, aspects to full to our our assortment our products. optimal a perspective, this us delight allows were to and QX margin data us of data compared the to improvements reorder in percentage other showed and using to supply timelines. and result both we ensuing as XX% customer. chain orders We optimize our able particularly the an roughly came with place risk with test planning and revenue quantity strong Switching philosophy results words, assortments more sales purchase XXXX learn to reorders. reduce deliver of support and high business. Reduced and ultimately helps of fashion from we our reorder of

well repeat some That in customers XXXX. as record engagement existing Gen on resonated Record launched our Z with channels, in campaign as confident, brand as as And new basket, information, in as Lulu’s brand learnings new ad and women momentum formats engagement have our together millennial very healthy well of Lulu’s our for gained with AOVs marketing new and monitoring channels. women. we as Based campaign marketing customers to repeat per markdowns well feel the desire we a campaign to are lower well fueled XXXX. In Successful from channels baseline ad throughout runway untapped learnings by sets with proud formats customers more items XXXX, fall XXXX. and audiences. engaged and learn We XXXX for in awareness program in growing of been we new of our continue we access and up well acquired of showed continued QX, incorporated have for marketing us test all and numbers this in the will assortment. especially a discounts and great of we

and that general the order customer contribution expenses. and and existing first after challenges customers. effective or and and margin of customer Lulu’s that new below reminder, despite not limitations selling with a And the those As fulfillment for re-engaging been remains as regulations contribution presented changes In in in customers time, our expenses in and other order our introduced, Lulu’s privacy attracting iOS efficient new is is first acquiring profitable. tracking contribution over margin SX who has words, costs and in marketing familiar margin have are Lulu’s a

us incrementally tooling data have continued for site on of to analytics and effective provide in each channel with beneficial. sets, audience which spent, proprietary lines what is Our

to of selling way. revenue to a we our with and the that iterate will keep expenses a finalized and of net marketing try As this remain recent app in platforming years. And our as continue pushed recent devices. In adapt it result, line to percentage successfully and our QX, to we mobile customer's

The updating have engagement of the been customers website, are and seen of have to shopping app conversion seamless reduces the We product a re-platform and benefit lulus.com highly the and improving is the improved further experience and was customer on focused as and immediate app. for by result in making experience the personalization a desired identical friction. the which app now experiences our that already

In focused very customer style our leading CSAT are high fit support the to whether We customer XXX% we a provide also Lulu's That scores. top satisfaction customers. customer our we and or wonderful a advertising. And advice. our for our XXXX, best proud scores are and are providing indicator brand related customers possible providing word team. not of scores CSAT XXXX always promoter measurement is mouth scores of aka responding of net experience, are hug continued shipment our They on exceeded the only questions

benefits each first-party loyalty us our Love count points back Points loyalty providing coupon a with customer's customer through we with us closet. points The in QX, Rewards the And a was share on in program four more Whereas reward deals. level Customers data program Lastly, rewarding access. their discount and previous flexibility and re-launched The lifetime insider, Lulus deepen Rewards program. priority and for to our increase icon exclusive media notifications customer earn increased various earned has on relationship to customers, new Love is our levels can focused and following of all ways like in channels. occupy Lulus. value our engagement with purchases, social stock program. of towards member, offers larger her program

our program And my looking in building are quarter greater discuss introduce Landsem Co-President the now We forward loyalty Crystal XXXX and me and CFO, to detail. out who beyond. let colleague in Crystal? will

And everyone. good Mark. Thanks, afternoon,

certainly results. as exciting reporting strong a we're public Our continued as us be been pleased first to financial company and expected, for quarter has new

growth, across and profitability As an mentioned, key cash including net quarter gross by outstanding David delivered we flows. financial highlighted year-over-year revenue, margins, metrics,

value customer. continued and to needs, fourth records their their in our our new units average in of the social quarter, per average order increases We fashion order, and for with also customers active average the set everyday returned engaging customers reflected back to calendars us as per most to number for us spend in come

a and prior the XX% revenue our million $XX.X During same grew the increase QX, to year. by over we $XX.X million, net period

XXX the driven continues quarter. new engaging compared of active very increasing million we with community In X.X the time our customers large of to all growth customers by proud combination diverse high active us XX industry-wide loyalty our be chain XXXX. existing factors. the in line served the with top million and growth see success customer in months end base our strong driven margins of as by for has Representing Gross from of our key We're January number XX.X% acquired customers increased profitability two XX model customers challenges X, repeat can XX%. us and path an our of during of enabled you X points loyal continue Despite growth from quarter the XXXX customers. fourth to months ended X, to to fourth of January business supply QX. basis Our

at discounts coupled to at driving demand fewer facilitated customer with strong demand non-event and sales agile categories. last an annualized and Along dressing the full with And compared event rate turn of second, everyday First, rates dressing times. eight over markdowns more merchandising demand, year, reacceleration of price. inventory process our accelerated

we delivered very table, we just turned inventory. we our demand QX, strong a While left given we the how believe quickly on

all markdowns by and AOV XX% of as XXXX. an to due items lower high XX% discounts time well as over promotional driven and reached XXXX cart increase Our AOV activity. With per $XXX the lower increasing over

insights line to P&L into give to items. down Moving some expense

advertising. amounted selling compared increase line awareness the with were marketing furloughs headcount equity of $X This payment to bonus Higher stock General more earlier, in expenses payroll compensation, in and as our processing the higher administrative improve in-line quarter, launched revenue. marketing consists IPO. options increase from marketing And prior business Our also primarily vesting to triggered to primarily for prior to campaign. same $XX.X first the to net our the the Mark with results volumes. the and $XX.X normalized fixed acceleration year the a and mentioned costs return related up spend brand and related and the sales by period and were as higher selling Variable year's pandemic. increase expenses, due based million in previous year. online to benefits awards million in performance ever expenses state we with expenses $XX.X to $X.X due marketing million QX million and to where and expenses one-time were fees suppressed of other due special COVID-XX an increase an costs million of reflects the a expenses

insurance also to in debt not professional began by fell of year. have and costs proceeds $X.X incur prior QX Interest public expense our expenses company off IPO. increased We million from other result of $X.X the service term that the did and paying related million. to The with long we

Following outstanding of the $XX $XX revolver. draw our debt against million had IPO, representing we million a

$X prior dividend IPO. based Removing quarter, shareholders of per adjusted per due our non-recurring to loss triggered net loss of share of $X.XX the included and this management IPO. deemed offering XXXX. and stock and down loss associated quarter dilution fourth $X.XX of the with impacted of for public $XXX.X For our the the preferred per stock from with an at shares initial million who share transaction due stock one-time dividend, anti-dilution non-cash dividend share a items, to Primarily reported $X.XX to diluted other we the million, a the quarter. in held one-time the impact only a time fourth compensation The feature deemed are convertible $X.X to related the the of million

share of prior loss period XXXX per $X.XX $X.XX. of loss Our than full year per was the greater share

adjusted positive of mentioned non-recurring per net same for impact year per quarter the adjusted compared the removing a of period the our $XX,XXX $X.XX. to diluted with loss $X.XX non-cash swinging IPO diluted afore fourth in earnings loss share million finally from to the prior our in XXXX. items adjust are of was However, connection And was the the $X.X share EBITDA

up a X.X% XXXX. was the margin X.X% loss same EBITDA in from in period adjusted QX Our

the and cash balance flow on statement. sheet Moving

and balance We up to our our peak customer to new demand, to repaid $XX season. and for building completed balance million against commissions, IPO other debt million prepare summer borrowed fourth the of continued We better our XXXX meet we quarter, with costs. our the on the and serve spring During XXX% net and XX, invest after issuance $XX upcoming increasing in revolving underwriting and proceeds inventory facility. long-term and discounts of November

long-term We balance $XX.X comprised X. debt of as of net a $XX $XX.X million balance as of million with January in focus closed the We our are our growth to on of debt cash million positions revolver of initiative. paying well and year

products, inventory, ended $XX a the inventory $XX.X reduced overall, positions as reorder We XXXX free operate For business turns high and XX% fashion year increase $X.X and we generate positive also QX quarter highly significant were end our to that risk XXXX. with the combine able of growth and with inventory flow. an buying capital QX considerably to believe to at cash We're data-driven us million efficient industry a fast compared result. higher leading. approach both million, new to In revenue of the or full we million due to turns our for

software invested to spending For the purchases, as for hardware equipment year the and amounted from developed $X flow general in Capital software. operations, we year cash million $XX.X operations. we generated for and in our million internally

on guidance, you our Moving I’ll walk year. to upcoming the expectations on through

reengaging build we successes brand to for years the great as our well ahead. our even XXXX, attracting existing continue our loyal tremendous at in gives we new customer to higher us in base confidence customers ability start XXXX growth The As as to continue to levels. opportunity the strong on in see

to our environment. ability and We product have model, in the LuCrew, navigate macro deep the current conviction our merchandising

and of represents accepting $XXX XX% We’re growth million, net revenues year-over-year between to million which full $XXX year XXXX XX%.

business think XX% Adjusted $XX you net XXXX. million to revenue year, million, XX.X% event to for compared fiscal EBITDA As dressing. of normalized is $XX.X and represents revenue is due be margin our adjusted This equates which demand second between an modeling in over EBITDA to about seasonality a XXXX. growth third expected in our XX% for typically XX% quarters in of highest our and to to

a over company to a X.X prior company related EBITDA to compared year, adjusted public recognized rate X expenses million incremental expected two roughly of margin a for the Our guidance million public year, the the decrease in XXXX months by XXXX. primarily driven than less being of expenses captures fiscal –

targets year Our of guidance for XXXX. full are a

rates expectations guidance set our similar However, margin and seasonality net our quarter. revenues to for below depending fluctuate above likely EBITDA adjusted have our modeling full on fluctuations the quarterly year will as rate and purposes,

to last we to be the company adjusted expenses, in of third of margins public which investment as second year and infrastructure initiatives, and well compared redundant this second third expenses EBITDA the as require directly quarters related expect higher Additionally, for quarters some operations. year, to lower somewhat timing will

a our extinguishment IPO, less of million debt. compared long-term expense following expect a down $X.X the which we the interest of $XX.X million As $X year, for result paying included last debt year on than to million of loss

investment like our IPO year higher highlight post Being This full of IPO lower four year quarters. to off outstanding I’d the share count is includes a and half share diluted included share a shares of expect expenditures, shares, prior forward. We XX.X to the all capital up leading average, quarters following a weighted going areas count million fully the which counts date. higher than of across prior three year weighted as year the

to plans efficiently continue our which as in customers more planning we’re of even in grow we XXXX. capabilities in investing First, logistics to These scale. to logistics our facility, our third began in continue initiatives QX serve include investment

consider first we’ve successful year, the robotics will those and implementation beginning the our facility. Once and a launching in up completed during savings of half continue distribution the Northern inefficiencies evaluate on robotics in cost investment in of ramp with e-fulfillment efficiencies while the half second We operations year. center, expect we operations our some center to return we and the California

improve external software ensure to lastly, personalization insights. continue and platforms our our further customer-centric our enhance data in experience invest to planning customer operational and And to our platform maintain improving and marketing planning investments also to We’re that and customer we and technology in efficiencies. internal with we’re shopping

roll to the $X year. expenditures With full million between expect out of XXXX initiatives, the $X capital we fiscal for of these million

is fans EBITDA. board brand XXXX. we’d Mark a a shareholders. turns, and Lulu's and Without fashion We the delivered support, with believe growing On have sheet a And and not behalf fourth a light to strong your fast quarter we risk. like fiscal balance such merchandising business LuCrew capital concerns with I, the high of that growth successful Crystal, of course obviates our inventory much of and could thank model

quite look with FY to the new start building are and to capabilities and performance pleased year We XXXX. new records setting the in forward

your at chance quite here for time. have to We special Lulu's. Thank you the do something

We will look forward to hearing your questions.

line question Mark the comes you. Our with from Thank Instructions] Altschwager Baird. of first [Operator

may question. with proceed your You

Good the – per to XX%, and about the of versus to revenue active afternoon customer? back close thinking about customers revenue picture, guidance XX% revenue versus Thanks. up XX% plus the and then, With was to XXXX growth And you XXXX. bigger to are the growth respect congrats half year. how growth strong on

big in So pretty what’s the in growth Maybe giving just talk about rate. up more a a acceleration? step the XXXX guide confidence bit little implies you that

is transactions of per average us all frequently the with really we’re basically our perspective, But as sales and right line around they’re To because say repeat revenue repeat a across as economics the how customers a trends value, from that also we’re come new repeat acquired per equally very healthy seeing we’re customers improvement with customers. where year, well average great anticipating transacting seeing order to and both their improving customer. re-engagement in from generation our in spend

just the up classes, and gaining across we’re is driving class new there. across also well. And [ph] board expansion the board as we’re seeing our from non-event momentum, which our improvements So product PTS

once combination really it So a basically of everything hitting at it’s all effectively.

year up, much in growth of just pretty great the of healthy you and customers I That’s how where customers, line new believe end was lapsed some to reactivation curious great. quick figure it’s back the with follow active year much from customers to XXXX. the versus in growth see COVID this of the And platform? the were

a like customer inventory into the well healthy due we clearly progressing lower as that slower saw both was levels, We was how reengagement, then both saying, had It through a as that start manner. really to acquisition the in XXXX. year, got in new XXXX we Crystal performing but

of Thank Best you. luck.

Thanks, Mark.

comes line with question next Jefferies. Randy from Our the Konik of

with You your proceed question. may

kind as then in an Crystal, of talked I’m to fourth leaving great think inventory and a but on problem airport, quarter have. How a sorry. quarter well. are great table, third really little the on It’s – the I about just there. guys, in guys to XXXX? turns elaborate terms the the turns just to are wanted same Hey move you how do going are you tad throughout the about you How year about we that? of Thanks. a thinking thinking about And growth thinking about little How you or of kind bit inventory be rate, that? to of staying inventory kind want should higher. continuing down a you think at the

a that’s good Yes, question.

in everything but pretty able turn So where the with said growth fast we’re where testing learn into way. turns pretty we buying inventory do our and that demand, With slowing rates. we generate interesting our we testing test luxury that to have low reorder upside do down model capitalize and a problem to risk some we’re and on continuously

buy, as do turns, So to we we XXXX, problem we really more but sell. think we where this the about have the more nice plan we slow

growth So to bit. potentially, upside commit turns slowing I’d down to a are turns little continue and but hate permanently to so and push those we down, ways to at our looking

marketing Super bit there’s ever you kind helpful. sounds little more, successful my guess your be, to marketing campaign. would a like it obviously last a response brand I first very if can question of unpack

general the to related how same the the you’re perspective keeping campaign, So going you of give kind be us helpful. you some thinking can – just spend. different point business little about international a on touched into you thinking I altering just you’re quarter the last marketing then expense bit on, think in marketing of would that about or things some at saw And levels XXXX, campaign your

So just want about thinking that about be you’re how as well. to curious

guess you’re a to what the fourth good in Thanks in, Given really quarter. happened response seeing I guys.

Sure.

channel app type understand of the great to the around what So format and around approaching to campaign when, versus the is example to in there’s learnings learnings formats fall, can audiences. That’s you for the along learnings new generic And with existing or that when you’ve lines in said, like learnings learnings audiences which content, content more better in areas. there. around and specific some think content we or well, three And it those basically works there’s got comes channels, learners I started brand new bucket we of channels. had, in targeted

doing. – is And that, done applying that incorporating that with XXXX, we call so not lifts incorporated that we've what also And that and understand forward, going example, stop. from marketing obviously the and our test were we be it that are, channels, we that always but in into Brent to, to we have in also better will awareness our learn but the that continuing and to way will for evergreen

talked we because brand brand campaign first about specifically really time products. for is a were about of, it Lulu's we the or campaign why formulated instead to reason about talk was the think – I the in a Lulu's

to had So said, that change with a I we very very, resonated both which and well millennial Z. last content see was Gen as very like was year, interesting successful that as how that

on Hey, Randy, let comments me add Mark's on that. to

As on and a primarily performance muscle the wasn't still it and important of we on but outstanding we're to continuing capital brand it grown we've word absolutely our we've wasn't and able marketing, structure brand and you in it. efforts been and a push were marketing, exercise family, it based to develop. with wasn't building, previously so mouth us know, that's friends for And through

it have certain heavily will about we our you first do, we're performance be year-over-year was to think really and versus spend this it still still the not towards – into So weighted brand, forays the the more if will our doing necessarily we've build the said with response. much capabilities, weighted but years. with been happy as pretty and learn those what way which for to of into And spend up we're continuing, Mark disciplines and the test be

Super helpful. Thanks guys.

Safe Randy. travel,

comes the Co. of Oliver line Our with next Cowen & from Chen question

may with your You question. proceed

very existing as think factors, any about The and the future better customers you. amongst look pretty versus we to know UPT bench artificial have – AUR was you on we a ahead, then And Thank modeling transactions? in predict average order impressive there. you do particularly demand, intelligence advanced Hi. continue as new value I on expect that to momentum

modeling curious Lulu's. you there's logistics, So And feasible? better up of follow unlock What's the those, the what investments terms at in a is on and as Thank about happening was speed? infrastructure pursue you. a its customer biggest I lot I assume

average the question. tackle I'll order So value

what separate our discounts relative an expectation bottoms to was consider will would the item a UPTs remain is prior So and areas non-recurring years. increase a really It around forth. so markdowns stable. we as – potentially an higher in of in and year product in expansion wasn't I UPTs, as experienced And pushing that for compared non-event with a with reduction well last tops and class exception up our

I wouldn't growth in expect growth a wouldn't strategically classes. in to trying – massive pricing areas. we're we're to looking I to So push aggressively going be either increase wanting not class also product But in other more at AOV those as versus push product

grow versus from temper give customer. to and some expectations AOV going expecting mind us we're our take from room continued yes, every again, to dollar So would I more but share perspective, after momentum,

With model?

demand. to it as to relates being forecast modeling So able and

and supply different triangulate whether team. I We from we do are on times to business, as team maybe lead look marketing, areas we especially would as we're planning to from but functions business as P&A our well integrating might how we at demand, capture in like to be. with can evolving as evolving others optimizing constantly and times continue its our And not say process that how chain these the or within data our always sensitive challenging

say room for I'd So there's plenty of – optimization. there's

we're great it, good become I but pretty at I think it. at can think we really

that area. it feel still a I So lot of in upside

it investments speed and indeed our why last we our it's that the took we're relates there, making all through to to as house. from That's control that receiving well our as question infrastructure in quality activities goods essentially the the relates about levels. also back XPL And it then vendors, outsourced of had your surface and we as as

we've of to Pennsylvania sooner facilities. the And regions. already So throughout nice we closer basically the for the markdowns from year, the we longer product deliver ultimately And orders the a and we then have that also also where that available a than about about capabilities add to California sellable better perspective, this is products essentially online control Eastern data be essentially can to And Southern because facility time those logistics a and sale, faster further window. Southern then in kept Nevada, size also reducing when Northern have which we we facility seen population it's will that in that and California, speed. and from fulfilling essentially California off we outflow

you. best Thank quarter, Great regards.

Oliver. you, Thank

you. Thank

Thank you.

Our line next question of the comes Brooke with from Roach Sachs. Goldman

question. proceed may You your with

provide January we've perhaps more months? the and past rising hear couple year little omicron and on to seen as that of afternoon, much the engagement some sequence the date in the the the taking customer some expectations for of of pressures also throughout as in you've trend, and your I'd you've a the love so growth our if detail, I'd about could little seen a Good hear navigated you context variant you've to to how you unpack some more thank wallet bit for that XXXX. seen of question. love trends to consumer

do versus pricing, and some that we we're everyone others we're customers. inflation change beautiful increases our pricing. than we also would it. is it the have sell will. our, take surgical And affordable comes happy reducing that and of scale really to we that scale And perception as our And our are, customer. thing our I always we for our exposed a report pressures And the to of can't less of less the economies if adjust are we're speaking and – value say get that the up So grow about feel inflation and be. to room for lot through continue because we possibly but them process, to We we price but affected optimizing market. certainly maybe we're customer take value not and we in course, that we're by about is to from have, of a from to sensitive approach prices we always purchasing sense, times persecution luxury sell we on through that from

sense And are in our about So in that that, bringing again, to do really how that we're and as at pricing, surgical to we our the really when what inventory with goes in talking quantities. we're least product, not those any grateful for market. others of we extent seeing it with, we're for and but pressures. the At her as how back well are our buying not

you're love And just And the little about more time? you. Thank to bit Great. maybe reads to me I'd program; program contribute that enhanced see on a that a opportunity up the of that better that from engagement program? some the early hear getting follow then for consumer Thank to loyalty you. biggest you over for

loyalty to weeks that it relates too ago. be would rolled has and it literally three early, learning's or As two early was

rollout the went So I successful. cannot speak that. itself Other than that to

many issues too popped Our customers There received up. that not it well. were or questions

sense, in we're particular So happy very that about that aspect.

truly kind can engagement, it opportunity, we there really whether different or buying previous As what that of example, word are us, The rewards talking it wait program et for, our focus the talking or buying relates as a not of products for lot because now to use about. and customers, that of, to was transactional LOVELULUS discount purely that with just broaden worth was customers we for I our for yes, is that advertising, was oriented. engagement process options more think is And about that on mouth upon cetera. example, to

have we and which now excited that really flexibility we're are that foundation can on what do we happy to that to – is laid provides the So so And opportunity us about. build. the

offering. to And so she's the well responding far

one focused Yes, hug is from going advertising was party that become more on deal, she a having are us a a it be being number talking to where, things really tool alluded data, again a sort great the so our of of transactional to help laid one again foundation's that being an not is Mark We if think to, is, so gives us program plan. was as behind early back, of that's expense, is a great a it about had and that this going of, first we The you but hand brand and more for it. to engagement customer. that this Mark tracking also can great company robust loyalty very

see shares suspect on about with X you'll So X kind this both is year Phase Mark of the learnings, Phase X, plan this I time dramatically. like the next you and morphic Phase look what size and pretty

Thank so you much.

Our Hutchinson America. next the Lorraine comes with of line from of Bank question

with may You question. proceed your

in is give out? that, anything Hi, if but this Thanks XQ please if to for some Since not or consistent XQ is trends largely question. XQ our color categories taking on are non-event outperforming could guiding call how that and pretty with been Alice Xiao specific you're there's have particular, concluded. on specifically know for much to went? Lorraine I Hutchinson. you Which

we're about very things have nicely. and been QX generally progressing So all optimistic very speaking,

wear. also classes continue everyday would the sales into increase run offering QX, years. believe and that because our it in experiencing known increase do just As what, building for in benefit our and we're same. bit That traction from expectation but of not return event from more XXXX, business, especially a of specifically We're we sharing all of the dresses. be terms each gaining product of that we're social more non-events and to affordable overall their concentration details for calendar, luxury dresses as relates penetration for awareness we're a and disproportionate said We the our in pre-pandemic over QX customers to our classes to in

I So optimistic and very about cylinders. great. business going all things say, firing We're the we're off on are

Thank you.

Our line Group. Advisory the the Telsey of with next question Dana from comes Telsey

line your is with proceed live. may You your question. Dana,

Hi, this is Congratulations. Dana. I'm now. here

Dana. Hi,

about investments nice shows should and And How it we Hi, evaluating markers are the the think that, on with congratulations that that like sounds be year. that track? tech making, for what you're it's we should the on the it? quarter, progress be watching you as it's multi

next we're do the that year? on So accomplish How that? think journey this the markers? of you we What or year do what is

me to in in, jumps growth just Mark and growth, structurally thinking of capability I capability, of high data and always before have built and way, way mean, we and doing answer, jump and Then a capability if sort great team enhancing a do analytics are customer about it there's things. so try I'll team been shift in we insight, time just, things of are We're nothing. and the some just only But Mark around number for we've in them have so right? have I company work need Mark So, could give analytics, add let we're that along doing the sets I to those. but not short the in. do deal that,

an I'm think were not it's to you the that's about way I for, looking necessarily that think I think it. markers trying the because question. interesting about

well. I think,

is tech efficiency. – Its inventory everything we mean, and marketing I data is do. an

would say we're an tech. would I the, So performance making indication the be our financial advancements on our of

So…

then, that Okay, main financial be performance, the would I think

Tech supports we do. everything

frequency see, better insights programs creep over we start may, may and the purchasing offering change to if wouldn't we're be beyond we we we're some over You year. see current our price believe have going through surprised because the time the that to AOV up all, the points doing. start of will I

to for purchase that as towards the bias start behavioral behavior economics start move event change well. see from to sort very You'll of will a were

Okay.

technology is do Yes. side I about, for overtime? that OpEx, there's really the besides it's our really also And other and there things order part, efficiently more side, volume how That's why that's the I Know to right? scale more think increases. it's implementing mean efficiently, the And be sales other operation robotics. in example, as we our introducing on is scale. we'll we're the we

these, And we be fulfill But some in the growth of size young the integrity market. and it's we're talks, turns, worried where sort tap into may brand inventory these so we could knowing people untapped learned, well capabilities very Yes. with known, blistering the able hard as turns a as whether and faster not about pools, talk to as scale we've Mark that fast these that it to have be be and purchasing, right.

those the term. are kinds growth So things all in of going markers that'll to you're the support near see Dana

do it. And AOV then about AOV the think and how most terms just you the the your category with impact of in Got in up impact extensions extensions, on AOV on following what view? would category the

to say the, more shopping up. impact We're what our event. seasonally are the per of is non-events showing reads I that be classes. UPTs would going that UPTs see different It's up seeing shops early behavior shopping biggest those a than creep

be would in AOV term. least biggest, factor UPTs the the near And the at so biggest affecting

you. Thank

Thank you, Dana.

is up Chen Oliver Our follow and a from question with Cowen Company. next

proceed may question. with your You

areas. dressing terms you how thanks opportunity. second love just focus nice a points Non-event some finally to in be, key advancing really lot. a a continues as It Hi, around is that's would And in and of acquisition relative churn distinction and bring how if Thank nature that behavior, customers, new and to about on you. thinking of costs. interesting are CAC you it's LTV relevant or the

to teams overall we massive doing we our towards and our exceptional business, especially business shoes events in not that of we're guiding contribution numbers, overall pre-pandemic concentration building So I and are of of classes, out non-events our merge are this out actual tell compared we anywhere and levels our our seeing non-event of apparel, to but non-events, building are accessories strides gaining making share an job and spite will you, are reacceleration and

to We as well as had if begin of non-event a our that. Oliver, move we're we as into, we seeing and is with as in question. this think going side neutral that's softer the on history seeing else colors, as in dresses, of that, preponderance event on you're so had something it that team a dressing do and preponderance And a you legacy the company And safe about and well. the recently dressing, broaden the we as

we're learning expressions. we're of and the outfit, seasonal how So to power understanding color the relationships

grow. being history see patterns, the solid using have print also us versus very dominantly you're and of to going We

confidence these think to dresses, of to What's And for ability in have when – real as and subcategories we're dresses heartwarming so nice fashion we retail responders is we are those the continuing us know well. grow. the grow on tap stages. that guess So there but in are that you I spaces, remain about force instilling

big in a in this coming great be of ride again, resources the So market. is going to pools

customer also forward. that over the maintain as benefits it's influx the if apparel where initiatives iOS there's driving expanding also, sorry of truly historical everyday question and that cost for have the LTV have our, a the frequency our you David And then of is the, all program different foundation to relates more, our also to, UPTs, us. as for example, couple the to the to opportunities that we had LTV increases try to certainly leads so obviously, that’s your that, what those towards relates to started are assortment around are is and acquisitions getting higher and the awareness all but a then and customers we loyalty ourselves LTV, leverage acquisition with we keep about going more CAC course it higher with changes at it our all with to a look our to And privacy years, repeated forward already of will higher the right when of can around, do put job engage from tracking to going of and well. taken changes that last repeat And looking the there's we market a at for essentially customers maintain. we the the both, as spoked and initiatives perspective that cost and on

be on margin first we need a contribution And profitable, order.

So Lulu’s. I special that's pretty with think,

Thank you.

session you to remarks. and Thank over call the McCreight I would like any time, turn question-and-answer now reached back Mr. At of this have for end everyone. the closing to we the

Thank you all.

this hear year And past pride mentioned, LuCrew year. the and quarter. obviously again, start and the our thrilled the what already with You we're of can we've achieved

forward you As further. to I look updating

your for time. So you thank

conference. This concludes today's

lines your your time. this Thank great for a have disconnect and may You day. participation at you everyone