FIGS (FIGS) 7 Nov 242024 Q3 Earnings call transcript

Thank you for standing by, and good afternoon. Thank you for attending today's FIGS Third Quarter Fiscal 2024 Earnings Conference Call. My name is [Reagan], and I'll be your moderator today. (Operator Instructions.) I would now like to pass the conference over to our host, Tom Shaw, Senior Vice President of Investor Relations. Tom, you may now proceed.

earnings you results, us afternoon to which be in thank Third discuss and our and in found XXXX and at Quarter we our Investor afternoon, Relations for presentation ir.wearfigs.com. to joining FIG's can the website Good shareholder release posted press released this Oughtred, Trina Officer. Financial Presenting are Co-Founder Chief Chief Spear, on today's Executive our and our call Officer and Sarah

predictions, statements. expectations or do reminder, estimates, not call concern These remarks may are events business a future include As about that forward-looking or opportunity including financial on past market this performance, plans.

to and today and XX-Q Do and the obligation our and reliance undue risks of involve statements statements, not materially. discussed to no filings, update. differ SEC results we These filed Forward-looking speak place risks in review. are only forward-looking uncertainties, as you on which actual today, in could which undertake which including we other encourage we

useful we GAAP turn of we now for measures With discuss included and today. key reconciliations the are these and will certain shareholder the to in would our are Definitions that, issued understanding the comparable most believe like metrics call we to to over Trina. Finally, I non-GAAP business. indicators, supplemental measures non-GAAP performance presentation which measures

game-changing health and the overview where Thanks, this an and how balanced better wins which deliver will update by have where an I'll our we support ahead. that we number been focused on of Tom. year, product start quarter then brand on care implementing initiatives some today the of I'll and our foundational enhance professionals. to product a in we of believe results, of opportunity third our quarters with provide we areas impactful had a few

industry. our in core, the Finally, strong the continue to cash value flexibility sheet invest provide to return to the disrupt and balance I'll and shareholders flow how highlight

innovation an strong top-of-funnel Looking the performance marketing was at by line clinical quarter, and around scrubwear. our of top core positive supported expansive the elements signs campaign, our

by We around space and clear the traffic. encouraged trends positive leader be to are frequency the in and continue

remain in expectations including to community overall international, styles. across of stemmed we capitalizing performance short and footwear had in of emerging from specific footwear, of delays we and Additionally, stages positioning popular hubs. our our promotional growth the Areas the fell drivers largely early stock-outs and where business, teams the timing. In QX changes

We the removing also category our impact underestimated of promotion. QX from the

calendar historical lost of promotional focus, Regarding the timing, back-to-school brand this shifted our to our Olympic later the some given partly our of spotlight the promotion we believe we timing was due crowded in year, and backdrop.

While the for factored gross and we they our than margins footwear driven better factors these of expectations lower are are a mix. than QX, was more margin and in areas our into all outlook, were by impact our action. From are the perspective, control, slightly taking expected

the On investment the outlined from impact [expense] call. on outsized last Olympics we side, costs transition and the the that we experienced fulfillment

in Team a the storytelling for a marketing margin year what lower to will care, higher-than-planned We of the sports, in and that some where goal can the been about a becoming of a outfit and of impact unique community. Overall, combine how little us here to and the puts our the athletes with From better USA adjusted on transactional country's to XXX-plus has plan the margin we health bodies is The that our shift and through that to product finished order brand this late bit Paris. the key culture on was break our through of at July innovation. a into support cry ramp-up rallying outfit Olympics our less more A focus new EBITDA spotlight ever inspirational view values. for saw we Paralympics records. early with became team a Awesome shipping and we trough a work distinct building September, also incredible center any concept fulfillment for We newness professionals business, our top-of-funnel passionate business. Diving from approach. further quarter Medical first Olympic supporting of the bring below and our the our in we costs Summer we members become health are customers Humans intersection previously care point outlined believe to be

performance of USA that this be quarter, Olympics collection We and continue the believe the an Open over with and clear of in delivered the activation was in around to true of the measure Tennis the will time. our followed September. Team While we standouts impact U.S. Pinnacle one Championships the product the investment

on With Medical attention partnered share to care and thoughtful the a we the how Open's Chief Officer role health and same court. the of U.S. off both sport, pivotal plays with Player Medical to in stories Services Director

lessons brand as believe highlight, to ideas a Olympic Games. XXXX and eye bigger and XXXX As and to also around execute to the these the of commitment an we we some has campaigns these and role look opportunity culture, sports play we'll our

to We health key are can also focused those uniquely are on FIGS moments care in year how important the the that own community.

to an this period execute more as their back-to-school the than rather is we these not focus for care medical this the but a optimal of school the indicative around overall opportunity and next will on event is to This moments. health of needs on calendar, how timing our students approach just While generation year, was promotional professionals.

careers. More With work customers of school, opportunity to current a is that great that students our their this focused in ongoing engagement develop embody breast powerful brand can recently, extend over over campaign future Our on industry. cancer the continued our awareness. the of XX% we nine around

authentic from how to is we messaging, is impact partnership, survivors clear timing Here, cancer this together strive BCA and we indicative three community. relevant integrated impactful approach the of across to highly Humans our all Awesome drive against our inspiring disease. we which stories ever, and highlighted as fight breast This most product,

from focusing our On year friction been on better reducing strive has distribution. by side, the product as this product points we foundational to customers to serve

discussed, As of the foundation this work standardize to we [fit]. our includes doing part important we're have

is Ultimately, fit where and hallmark further of through is consistency are committed about been trust, exceeding we fit area going inclusivity. to even there a this it an have opportunities FIGS, expectations elevate While and to forward. is

all blocks all body Over core have and for type the past for our assortments every two product optimized standardized and quarters, sizes, we men's serving women's globally. fit new

minor our begin While improved legacy is of selection. fit have in and ensure our customers' to fit we excited communicating are shopping the experience to confidence with transitions to actively some find our January. positioning are products tools streamlined will include their work ongoing, right in This

our as facility to as We and community, to focus over at that flowing done highly to we XXXX. but have reliability discuss transition we center important we innovation efficient drive customers we new our as state-of-the-art, and completed to freight. $X will international this we in for the framework, of as an expect cost fulfillment down delivery from duties efficiency we here business. to quicker an Importantly, and couldn't to building great second leverage distribution the becomes goods XXXX. Canada facility, market have scale. flexibility, to fit automated is cases from will billion-plus fabric and financial is plan of August drive ramp on year. Serving also a means of the largest We Arizona. add this a half expect serve expenses been global now a we without the Canadian broader effort service center introduce this Sarah use successfully as even consistent our look in plan time blocks ability goods our of designed fit This range meaningful our implications center XXX% more our localized and the our have locking of increase savings near-term we

facility differ from immaterial require in will an will and investment. this our work Importantly, Arizona

touched high-altitude extreme Looking a the to on a and line off our at across across had distinct interest Pinnacle customers' provide One conservation historically, starting Capping the as solutions Formula wildlife with pay impact inspirational some expressions we confines medicine to a designed rescue that highly ultimately products. indoors. drive And we of the more to continue of greater are Dr. products to service Each brand tribute Medical are away greater and brand earlier, the will our of Team from of of of product the providing year, of QX, took the impact year, our the to most engagement as with conditions, extending are at to products a areas and not product execution, industry, go-to-market to partner engaging those focus range world storytelling and highlighting thoughtfully a with look Renata recently, positively closer has QX in extreme of design needs alluded drive predictable the range stories in These opportunities This some we peak lives. our of the business. that broaden the team. most racing to core drive journey in XXXX. we quarter, paramedic we've USA we

we While QX Balance New specific some with to incredibly the impacts, had our during were partnership footwear excited period. results evolve

on that down have however, of water-resistant on working created even time styles. the with is unique been our to for have FIGS a focused can feet, needs of we with how model, health midsole variety unique developed leveraging represents their environments liquids FIGS hospital to protect updates the though in largely XXXX which from to example solutions XXXX see brand first bring address making tool, outsole contact XXXX, collaboration shift, since demands extend great number, [beeper.]. Overall, existing materials great We to we environments. a a silhouette floors shifts as with as XX-hour-plus the provides existing details model professionals. the the on a in the The experienced ideas to The these and extra care designed and handle a prevents grip use on a on brand, To physical a the customers. this to of slipping and the

we the journey health at yet serve our new with XX% early mentioned starts customers. opportunity, in where over today. XX% better of professionals total make reside, find only This global outset, global our care to our about our up ways of to our As business are international

than quarter. trend, negative XX-point our was of growth from subsidies, duty recent XQ after lower the but reported of will impact normalize an reflects the which XX% reclassification Our current

of we are which growth where rate our number to market business, largest against just continue strong and Mexico both an positive XX acquisition, of and across the new Nonetheless, signs XX markets. of full and customer markets. Overall, XX% last we men up already our both year. are see reached entered traction are newer we high Additionally, two of year, the dollars including for and mix benefited of from those with our measures, a global countries Philippines, we the the international performance in incredibly of a now of entries this

we we prioritize and markets. As developed look internal ahead, an framework we future approach to have support how

our remains the population just and the untapped in in country, five distribution by Japan a most priority, a consumer care Singapore. and health Asia remains opportunities products. who technical one with highlighted gravitates concentrated professionals a current of over The market million towards Philippines highly

open ongoing Our in as we to our XXXX will new and here beyond. efforts Asian groundwork markets support look

is providing concierge clinics the range institutions. business large and of international brand, solutions opportunity organization, the to to of Our another aperture widen a teams tailored

date strictly to been to continue we reach traction has we set this see While a an solution. inbound and these up out effort to good us where here, customers

we're see some at are see sales Vegas will the to our This ahead building during had has it as we surged be institutions ahead top-of-funnel in relationships. building to area opportunities Summit in us. a care as indicated, keynote have and growth an we was we of also more teams. bigger been month how markets. campaign, of are our how And brand conjunction planting that recently where be elevated Las with well. In business Not an teams within privilege Importantly, of new team international this is but teams eager August. over to the actions Olympics some we here habits be see charged in to in orthopedic these outbound our But leads X,XXX seeds professionals partner the given I speaker of outsized traditional out attendance. large health the an only Ortho with with opportunity need with these community, proactive, buying humbling

our September. Looking retail, officially an our push at in nascent in opening Philadelphia hub into we official grand second opened with community

location City location With the trained U.S. provides learnings doctors engage and the located this to initial institutions next with our one look outlined, care of store continue every the health previously we in store, seeing excited As forward week. size quadruples you fresh Century in opportunities customers. we some are six tour and five our to at near the of and city to here

expect will during continue XXXX learn, and and test, a the year. to our locations We open approach in few apply additional win

and Our serve connect find paramount and speed for align to community. of the thinking, the health our types key a embracing and of better FIGS to To that to is to ways is us explore to with the believe A formats in ideas optimally industry. we role change is be this, care allow plan range agile with achieve that it always local communities. serve location the

and education in an by million health launch the within like minority $XX founded As innovative transform the large, Co-Founder, through to to FIGSs today, for outdated inspiration months, professionals. care Hasson. Expected Heather technology platform. FIGS, such, a AUG Much company a AI are for next a AUG led we offers investment new announcing revolutionary platform [AUG], fragmented multidisciplinary six industry and looks a original and

we a improve that our the mission-aligned the announced ventures health to share we excited foothold will engagement, receive program about business, which value gives believe drive and to platform benefits can flexibility generation, our in professional. With across like enable will tech with its in have their ways being of and are customers recently We and to most through balance AUG FIGS to invest details cash importantly, be work expand today's flow care strong serve AI. community marketing, more in expect AUG. significantly that experience when to and investment of evolving stronger also While us sheet AUG range this announced we our this repurchase rapidly FIGS innovative and us return shareholders a core environment, ways will data a launches,

and quarter fourth we for think we lens XXXX, customers through about As to serve efforts will best health how prioritize community. the positioning the to continue and incredible care our our our this of

holiday decisions Our as expectations in a tempered term look are make to dynamic backdrop. what likely be we across will the near disciplined

across Looking will ahead, the experience, these strong product, of foundation how our we storytelling and our initiatives ambitions. business with excited fuel is are and growth

excited Sarah FIGS I the over, would officially have handing with space, like our and both incredible the I'm and them the as Both our outlook. Tom we now to community. against consumer Before investment to to updated to the in call Sarah branded execute quarter to partner welcome set and team. I'll it agenda backgrounds growth continue work with discuss and over and the pass

Thanks, Trina, kind words. appreciate the and

powerful to it opportunity a brand can being had It and care takes the months their members updated that be what results been with care as health by amazing Advisory role. voice in the and I start left our play observations Healthcare to touched our these humans. a recently who and Board, a to we professions and part challenges empower of in the few incredible in journey the humbled and discussing my our Before I this awesome I professional, workers. they team provide outlook, celebrate brand. a first play face three from connect inspired unique health and of has the the to these collectively to stories, I'm of relentlessly role want already behind that experience an with rallies part

we and And bring Trina am out to product here service. health more delivers efforts address to at inventory have how grow and both need excited and bar rigor and and We fit to to of the like invest additional call As laid the process like side, we are building this to range Together, unmet remain I new color. you teams the are show of across work innovation the in internationally must when and strive channels, ingredients forward product to in professionals lead the meet of awareness both And hubs. needs. and these on business and we must refine depth I when all into a to assortment diverse clear. And premium our brand objectives. add and and we will foundational our to high we community evolve and some engage as strives our on performance, this breadth with management items customer care areas methodically with to returning We our to stabilizing around rebuilding year and where line set how, This working our look continue the several that look of growth for across these margins. progress on top to customer. I which is why laser-focused approach requires disciplined community. we optimizing our a

million, third growth, X% on performance. that timing returns and by and driven discounts X% dynamics units customers. revenues outlined. accounting quarter decreased reclass Now to promotional related a our AOVs $XXX.X for the factors, below combination international Net higher of to expectations X% lower decreased primarily $XXX, to the for and Trina transaction, to including footwear subsidies given duty per our

net for Compared higher increased positive purchase experienced X% second X% the $XXX. customers straight revenues period On $X.X for quarter. to to the period the last trailing side, customer XX-month frequency decreased we active year, year-over-year same per to million, the active while

successful stock-outs increased and of limited performance well styles edition new overall net also our X%, positive in declined XX% of including XX%, assortment at revenues receptivity initiatives, our XX% a tighter year-over-year impact trends half launches. Non-scrubwear net inventory by as of reduction reflected revenues. both of some from launches of This first representing the of colors color a Looking saw styles. and in the our We for core revenues scrubwear representing category, period. ongoing strong

business this footwear key our delay of factors: the XXXX strongest was performing and a missed in the expected styles. given promos expectations launch of prior versus events, year stocks driver to following one our decision category the in retro exclude a Our decline new of our in and from out timing

of extend FIGS factors the down to will are footwear, in assortment. these our also upgrading impacting and of we select QX, like some very partnership. we While lines and of brand remain our we process which assortment are in Outside Pro, phase confident product non-scrubwear our as our results reinventing

of QX XX.X%, proportion product in to points high decline to the mix particularly our of margin period. QX by was a for rate expectations a extent, The sales limited discounted lesser comping Gross coming in XXX edition scrubwear. were to we non-scrubwear last basis for contracted during sales year. margin related driven Additionally, ahead year-over-year shift promotions gross and the higher

While we footwear. dynamics some mix quarter performance we and this from the some adverse impacts, continue expect offset see to within did experience

XXXX. expense expense The QX selling XX.X% QX in higher to Our in was primarily revenues $XX.X expenses associated fulfillment to the increase for compared net our Arizona. reflects in of center representing the with new million, of XX.X% selling rate transition

a our expected recorded majority total $XX we in be of the to in XXXX. costs costs with approximately line. P&L year the million in the expect These with line we which selling transition recoverable this reminder, As across plan, materialized relatively

facility's we execution incur facility. leverage are we expenses with transition While of this we did excited this time, remain our as the ramped pleased and post-transition of team's higher-than-anticipated capabilities operationalization the over to

in XXXX. partially to Games driven stock-based QX primarily USA revenues by representing was of due rate outsized ago assets our results our Partially medical expense down of the percentage with for EBITDA to to this quarter pressures, million, Team compared X.X% to our million million, EPS was QX at shipping adjusted offset to a year the Inventory offsetting third XX.X% compared adjusted the in Olympic prior given for from representing last $XXX.X international expense third was and the along Marketing finished in $XX.X year. our to for reclassification marketing diluted accounting net XXXX $X.X a G&A majority was was Again, investments balance to in related quarter. G&A lower compensation QX margin primarily with period. a these expense in for Combining strategic We million, the investment items, million loss $X.X during and expense, or was of XX% declined revenues AOVs and of distribution is as the of compared impact or at of basis. third on duty $XX.X to higher XX.X% $X.XX XX.X% revenues. record decrease loss period. debt. expenses expense was increase $X.X lower to of the write-down net of of the center. these during million EBITDA fulfillment for quarter margin of the continue an a net in planned XX.X% The on quarter the net amount compared short-term $X.XX million decline QX investments. no outfitting a year-over-year two-year team net cash revenues marketing subsidies income to XX.X% related diluted equivalents customers experienced selling we Additionally, of by cash, of $XXX.X with year-over-year sheet. The Net include EPS. Touching XX% the

remaining disciplined to have We our the year-over-year reducing past and working color significant methodically five go-forward includes through fit on inventory with inventory work down the date not buys This assortment. quarters aligned made narrower parameters. a over progress

into repurchase We same and across in call, continue P&L. At items more the will future breadth our depth to we colors. our we innovation time, of to expect deliver $XX with surgical buys announced the impact share and a million XXXX program. optimize process the our On see opportunities authorization range be this negligible we and of as last

period year-to-date. new in cash build-out fulfillment $X.X the million, approximately for million expenditures the of under shares delivered average totaled During Capital of with strong center. remaining of we our free $XX.X $X.XX, worth with $XX QX, authorization. third $XX.X million the the million $X an finally, and approximately majority we quarter repurchased And million related to third flow of price at the our ending quarter

our to turning outlook. Now

XXXX flat the of including negative cautious compared the standpoint wanted growth event. revenue holiday and guidance conservative We in comparison. Black versus to Cyber prior outlook year-over-year X% Friday, growth. reflects year The of a net a adjusting and performance a the two items to full flat for positive call range both XXXX X% lower are to period, to our QX From consider out stance on more as QX, expectation important we more Monday you technical to our

expect gift We year's last including as impact impact to ongoing be card net a this benefit in we favorable a duty breakage lap following the reclassification, offset baseline year the period. year ago

side, gross our margin range full XXX we be the than lower XXX year, On expect prior points year points. XXX basis margins of to to to XXX the prior basis narrowing down

the We the year expect to will continue within impact for styles of mix, given scrubwear. and limited be edition the largest newness primarily drag

footwear, do particular Given impact discounts from expect year. prior somewhat outlook. mix expect underperformance the Similar lower-margin non-scrubwear, more with relative higher we the recent of QX, to our in for we a muted to also

in assumption, we quarter, the the demand continue margin expect a at first are given shipped international and then from the duty trend. years benefit for an planning this fourth outsized past two gross relative from to drawback the is U.S. Embedded filed claims improvement As the we to year-to-date look we customer. our to international for

ongoing mix We this period. will the during of benefit headwinds offset expect help the sales

updated would line to top from as impact to margin full recent comparison. XX% XXXX which X.X% abnormally year of will also as expenses in to view, reflects we in approximately To range center QX pressure more the buckets to to our note range we comparison year's AOVs we ensuring fourth the prior compared manage updating well EBITDA quarter. Pertaining we this our plan this absorb adjusted X% of expense offset, the rate selling are lower our expenses prior low A prior reduction incremental of while our for The as selling help the of again offense quarters plan investment SG&A operations costs quarter, we as to relative We outlook. portion rates plan a to standpoint. our expense on be expense remain our rate to fulfillment ramp from and strategic expected we as greatest each higher near-term in continue the is year the this prudently

plan I outsized conviction level well-documented a to The of in Supported we on February, call tailwinds. we Fiscal our that be line transition center outline from few year to our of high-level fulfillment outlook approximate expense million While $XX by by will considerations. dictated wanted more headwinds adjusted This our have our provide in and these current marketing has we includes opportunities. the XXXX QX extent investment the assess EBITDA our work become and fully investments. the as factors, improving though range a our stabilize top will margin, to two

position that customers that value others. With leadership in Additionally, of our positioning fortify ahead shareholders strong serve I our return over will balance to that, are mission business, sheet disruptive our Operator? our back to to our to Q&A. the years investments and and provides support optimistic range for and enable the operator to us serve it the a better our opportunities core find extend opportunities turn in industry. we Overall,

Telsey Telsey Group. of question Dana from first Our Instructions.) comes (Operator

As product given in happened XXXX? follow-up. become improvements XXXX basically is steady initiatives that quarter you and And you about where tailwinds that continues transition into do then a just enhancements the this or see the whether and XXXX, for XXXX, of what the issues what have think operations? it's year, And on I

Dana. to from Thanks, Great hear you.

that had This of XXXX. year, our our expectations rest the first by as delivering year. through talked focused year tools, second right? the roll campaign have that think to on we're working, exceeding fit, we we've about that consistent customer our I things We're how where product, into fit fit launching continue and it out of to improving to full relates We are we're going We're and the in innovation. quarter. So, refined our going next standardization the a

investing to side growth to celebrate align Awesome continuing and our and in scale. health relates to it professionals and for our this we're As continues International innovation product Humans. And our really optimally and campaigns, care with storytelling, our levers. coupling timing we're in together finally, and investing marketing grow and top-of-funnel to future marketing bringing

we is there of sales outbound business teams a huge Our strategy as focus our and area community build hubs. out

two. a community to have opening number we well. of We're be going Now year hubs as next

so, building number we've in XXXX off will And a pay think things that of I do beyond. and been

then about there? offsets China? do how And much directly much the your potential you merchandise think it. overseas? of And how forward, -- when potential for think How is from tariffs from of you imported imported Got going

Yes.

goods are from tariff not from finished So, perspective, a our coming China.

last different XX under the the Given environments have operated operated in and over the political Trump's we've years also now past. in environment, Administration

going continue to be so, our to of be what's bring across our professionals. nimble to care across meet chain, And aware highest all optimize goods our needs of supply to health of and quality continue the in happening we're the to suppliers

This Josh next Rick. comes Our from Patel Rick James. of for question filling Raymond is Reiss in

the Reiss Josh to Rick. filling a numbers. was hoping for in I is on dig U.S. bit This in

decline component. spend. give the I provide bigger U.S. is adds seeing attributed picture on could footwear if to U.S. and net in was to -- you a customer the So, wondering try if you're any customer the on us like know you any I more pullback how net like the in that color transacting,

also was that it impacted was largely footwear or the U.S. I wondering well? as So. if in international component

Sure. Yes.

in specific issues So, control, -- business we but the that and QX those talked within our to due are decline fully in U.S. about. our was

from inventory also footwear pricing give timing U.S. to our in We're here. and X our and growth I removed and the just back-to-school -- want inventory sorry, some context footwear business. of positioning promotion. So, quarter

are the know on business important looking execute our -- we control. So, time. as what's U.S. if I think focusing will, our in inputs note. we what's really if fall And the outputs And to continue control. in And we're and to will focused on that's very the do at we we over

And reason really the for so, to as that's the relates U.S. QX it the decline

comes Guggenheim. Our Bob next from question of Drbul

Two questions.

on just campaign. data just that more terms the from you And you've the it? of the to etc.? can can marketing AOV in forward? And with the pressure, start made I think one looking implied grow Do that you campaign branding second some then think detail the what's is I first driving the brand you either again brand of -- awareness the around progress just sort any question awareness levels a around unaided, AOV how have is of bit

awareness, the and speak Sarah I'll to it and pass talk to our about I Olympics Bob. over Thanks, to brand campaign then Sure. can AOV.

this So, our the want this as history, a Olympics, our the a say and And this the talked done about past. brand. win boldest brand it it relates Over expectations. to behind in will long This we've was wasn't exceeded point the play. I to was campaign in biggest increases to in billion short-term goal for to just brand that campaign strong We've that. data pay brand The We is long-term and earned awareness We dividends incredible really drive that media a traffic. points site search the love saw and run. over had the ever impressions.

Our surged period. during teams the leads

out during than really more Olympics the And really about of I a campaign demand so, lot was we was there sold more one on. The actually that was we launched big that have product the It planned lessons quickly. we there because feel should bought good campaign. Olympics the

saw As to campaign, pre hard it at purchase work that intent we who bodies for to takes increased it commercial, records. of those the post the break did notably. build looking relates some the and our that

time. and do big of top-of-funnel we of terms in feel win, like and moments behind benefit And definitely really over I on lessons buying big capitalize that gain those ensuring really the marketing so, benefits

piece the take AOV. I'll on

a was few AOV There's dynamics down. play there. So, at

annualize them shouldn't impact be of reclassification into that is the that of and the QX, and XXXX. will an in we subsidies, One duty

that partially our Another discounts within higher are by dynamic teams the business. discounts it the driven is higher portion is the and of

than So, but higher a made for for it that's discount that up an more be has rate, expense accretive business. to an

increases, clean. keeping So, as of business is will the really we just on inventory have other to impact. then And that piece portion our that continue our

of for So, that's our inventory today, gone website when -- awesome the we'll section like work just to our of part discontinued need pockets down normal business. certain a tomorrow, and of use items,

are those AOV. on the main think I dynamics So,

Brooke question Sachs. Goldman from Our next comes of Roach

currently the about little Trina, price bit customer you and expectation. seeing your some mentioned about you you as different how XXXX? Can discounts your mentioned the talk that think plans back-to-school you And you're Sarah, promotional elasticity XXXX promotion that a and the higher holiday well. demand into of versus engagement initial with for

Sure.

thanks, As it Brooke, relates for to the -- question. the

elasticity, during to we're nonpromotional Olympics, there to come it at think look that as Olympics. the that actually promotional in we saw people full saw quarter and fourth lot as I And inconsistency being We're calendar. positives that we price in as that buy the relates price. willing to we relates engagement do the FIGS seeing cautious some seeing a are into we As the of it are and third post quarter. we go we We're saw days. seeing the

really great so that's see. to And

are cautious we other rest as I thing the that of we the in we the is year. And just frequency. the at past, here Brooke, look think repeat about talked being key

back into see -- and continue see that in coming going saw Our that repeat, to more we we're quarter, fourth. starting to and customers more the are wins to third we us on the

So, I things the quarter. being like indication and given third we the just do feel of great but given are cautious in saw come, to a that's environment what

how key those about you're recapture the you providing into Great. wins? a offset improvement outcomes so provide thinking look will I for priorities and around the much of there follow-up commentary what could some and as be you of a more then Can some ask investment adjusted if margin bit investment you extent that Thank line. mentioned Sarah. little range of top And of opportunities -- of year guardrails initial just next the EBITDA for XXXX that the those by might dictated you stabilizing be could

definitely. Yes,

remarks have innovation. that's outlined is, around our in we've product think to some I of and So, premium continuing opportunity our really where and

think I we're to to diverse there's our them. go-to-market ways customer new connecting with opportunities invest into in and of to going reaching our strategy, elevate and continue

for million we the not in should opportunities growth. away. XXXX. we're to go work costs closer think And to have out key I normalize in business $XX number what's XXXX. And a of be continue up how the transitory we is and that up areas the will to But we've into as should set we're for of at impact marketing about give then in that well point. on rate we invest February. And those is ahead at which going continue invest this the great stabilize return large those I that as to setting us to we talked So, We'll expense components and the think would the giving that yes, out that guidance XXXX

comes next from Our question Oppenheimer. Nagel of Brian

So, a better to just understand quarter I have third couple of the questions results.

So, to first off, with respect footwear.

there, interpret the you And size my guess, -- upon could expenses. we then specific third A, footwear And growth sales was some was else? issue? quarter? Or out-of-stock then an extent, the So, I the in that, impact question should it second on to something

once thought. like sounds running, it now but is higher running you So, and at expense than new it's facility up the a initially

So, of there? any guess expense onetime happening? like about there going should that are in think I type what's is how events And we that And forward?

Yes. Great.

launch of footwear up dynamics quickly. in so into stock were were also So, we our get style quite event this a we're did were sale that out the our a in footwear last XXXX promotional we of year. from year, then terms We that we delayed were impacted key And We and in to footwear, in back against -- were sample there exclude stock our performance. of bit that looking several of happening.

dynamics next question, are next then impacted some was the last in QX. those that what of what -- question? And your was footwear So, the the

Expense question.

it. got I Yes, Great.

well we And some in returns -- our so, on higher costs and have of some outside around did some the that see inefficiencies we costs, really that learnings as of as transition post-transition processing. is labor allocation

that our control that those we after. that to we that are within are -- continue we think can So, things go

the Another piece shipping. higher our unit putting due is to expense AOVs per lower also on on pressure of that's cost

So, those are the two dynamics there.

too footwear to of a to could if a for you if you kind would And way that you that say here? break Sarah, just annoying of at look again, that the have sales out the follow-up but first footwear, there not impact been get footwear one. piece? Is exclude And here, on company

Yes.

promo, quarter. were we have and year-over-year causing of is the the We expectations believe met specific footwear, we -- down do non-scrubwear. would in didn't have in that lot So don't the if decline misses year-over-year in with give the for guidance. that we footwear We the and our a for footwear

Hutchinson question of Lorraine of comes Bank from Our next America.

XXXX. higher on out outsized an called pressure You marketing as

marketing should and a to a there As spend? we normalized about level as sales percentage or we XXXX beyond, look of dollar that is more think

Yes.

XXXX I of our levels to outlook our back think we'll with in come next be for share on specific when marketing able more we call. details

can stabilize refinement opportunity the we I think normalized likely outsized that to return of think that line. and to we you we've some it had top in continue to pretty see where levels will based and on invest business with

of comes Koranda from Matt Our next ROTH Capital. question

related about then assumption? to terms you the Is footwear AOV into said to and mix need kind And curious in promotions that the do that of AOV is sales back get down outlook. to we what Is of quarter fourth positive the Just that still territory? see to headwind stock? built being out of

Yes.

perform expectations. QX our about we QX as did below the guidance, think So, unfortunately,

So we period. are the on taking stance a holiday cautious

is does portion reflect our Friday footwear we trends promotion really Our into the see in the the expect Black that will a QX. guidance that, QX, big Connected inconsistent reflecting also is it to business from quarter. and of to

think we And are to our do So, trends footwear prudent incorporated QX. cautious. all it's for into those be of outlook

turns to thoughts Like on Any you've just that curious, that think Trina, long about a as that into Olympics. between how that your demand? of on the the length exercise maybe translate the there? I'm that then takes and of what's time brand into ran rule thumb sort that should of done the conversion? you campaign building around then brand awareness And we to take get engagement Okay.

Yes.

own the seen FIGS we scrubs of we've what really out. think searches we've that seen play a search category. There's I that a similar up. lot I for are in a they of think number our of -- that showing for We So, is see that lot

traffic leads our is I up. up. about being Our Teams talked

list subscriber up. e-mail is Our

we All time. play -- those look of out are call up leading of what all that see those work to the of dynamics over outputs I and of would indicators And year-over-year.

being to return six want top-of-funnel results right? say us of deal. you, many In USA's The outfit now over months. they many ever it's have first with this organizations to campaigns company having medical cases, partner And credibility work Team And partnership come some want over we return saying, to really we to you. a big the results people years, team, with

up over of I world, I who to we going brand, we're formalization it And we're this are as we very, value which benefit show we accrue So, for who incredible a Winter in think in with future. work our super very the XXXX USA's L.A. the Olympics are and also Milan, Team XXXX, about. the long Plus, term. really think in will how in backyard, in Medical outfitting is excited an team

strategy, win right will product with long So, our is innovation and us I over help marketing, it's strategy, the combined think top-of-funnel it and the run.

of next question Our from comes Morgan Stanley. Feather Nathan

then these you brand-building going lumpier as the things bit and traditional normalized And you your First little think balancing marketing of we of could cadence the marketing bread level? next does about how events forward bigger kind some of more the over move larger campaign, few marketing? campaigns some about are a then thinking butter more years, and between these off, that Olympics and a of through as of mean performance given be the

funnel, the -- funnel continue the to the with think those brand well, there also XXXX, of said, to is to having have contract XXXX, full with at are campaign look the I an that be customers to we going the anomaly. about We -- brand I -- don't USA. partnerships awareness being top of nothing we're mid-funnel looking we're learn to converting. about going to consider over opportunistic, Team where to be bottom intact type is bringing -- marketing right, they're have and funnel is think to this the of But of FIGS right?

the so, profitable. years last always been our is has always We've over the why been marketing It successful XX funnel and in been been approach. full And be disciplined to and in see we've of we've front continue strategic also us. our spend exciting opportunities spend, and We're our acquire to opportunistic how be we when we why going customers. in but disciplined

year. bit And then a to the I know one the originally the That's Okay. talk want helpful. you I sample sale about in you had only quarter. in ran Great. for planned

magnitude So, changes? business how should interested seeing hear we to the sale, given were any, the that. you carrying, in of to what that drove then the think connected about if fit inventory the And excess you're especially

Yes.

sale, terms So the in off be we would similar. QX identifying sample last in led cadence of promo quarter that our

include the short. try that and some falling -- a We last of did sample sale what similar sale that up so, and extended And the have did still did that. in And this we end offset sample given did to back-to-school to year. we is our promo,

And some are so, dynamics sales piece of there. those the sample the on

from Cowen. comes JD next of Kernan Our John question

fulfillment you does more can Sarah, to you've lot on in What the How of to been Fiscal through a look XXXX? investments expect into last investments? returns numbers. these selling the several of of years know over expenses. there's see time and I type that carry on some had

Yes.

to future to So, flexibility to scale we order this to needed the center provide investing be was customers reliability. into fulfillment would the our that's have great been able our in to year, and absolutely new with what in give ourselves continue

set perspective up next year. we from so, that into are And

to we'll expanding customers. look logistics network better I out to at serve continue those our think

next we same great our That investment value we've be of that -- won't distribution a provide we'll looking center the have be to because we third-party year customers. will that level done using Canadian Canadian will won't provider. So, this a year for

that be with we So, did you a costs of transition high you degree seeing Arizona. facility won't like the in operate

is Got it. marketing. on just Follow-up

a rate does the of sales? percent that season the long-term of I the think up How marketing fourth holiday then and dollars as how think were -- do year-over-year. right quarter about we XX%

Yes.

results year in detail call was for we QX. for XXXX. our So, we marketing our as in our the the But around share all outsized will give XXXX more on investment specifically February really expectations on

more mind We expecting into available more XXXX in we're look and drive continue going quarter continue are the And details top call in marketing keeping us opportunities share to we that of then well. about that normalized level So, what as next to line. when a to in share at in we XXXX. can for are to QX for going our more

Owens of KeyBanc from Our last Markets. question Ashley comes Capital

zoom probably going the to one a drivers just want more broadly. International I first, forward. and is out of little long-term focus bigger So,

you're how those, to just about are how some building and thinking most going just focused there? could nuances the you the be on, about around And BXB. ones is of markets hear brand awareness maybe that or curious that in [DXC] focused So,

Sure. Thanks so for question. much the

We're early scale. and XX our Australia away, they by first U.K. and market. Canada our largest large. now and grow other to continues entries, international in far So, international was and and our were two markets. of remain relatively

given clear and Japan quickly aging we outlined, high now, some professionals, Philippines, Asia. Right population we're only continue health we're of As concentrated in we the and is great. Philippines and mentioned, highly Mexico to care really And and focus and the they've on out then focused Singapore. on function. emerged for million-plus product us, do building the a a focus technical five things and

in at leverage our help we can believe other countries Kong markets over into will -- other South that springboard as forward. so, and going work in a is we time. And We and Hong us in we look really, opportunities Korea really think Asian

a So, as but continue health language, market care we're standpoint, bring product market from the do excited but a standpoint, more, world. currency, professionals localize around to etc., more really to to to much storytelling to we by continue FIGS excited share to from really

Got the shaping back campaign, hear not Olympics would love rate, marketing of little then of on thoughts cadence just success circle Okay. so campaigns how around And go-forward just curious strategy I a on that. to bit the it. that's just the marketing, wanted the but to and I quickly, much following on

I mentioned less being transactional. think and you more inspiring

to telling about and about stories There's we're to going think Humans. about to Awesome about our I stories more continue mean product, telling so I stories many It's It's do it's that. our Yes. stories. tell. about telling

And and so, telling to I the as it with telling have strategy our relates our think same really and do in as most product community time brand we incredible and health launching campaigns day-to-day business, their we top-of-funnel in professionals are right the launches partnering at coupling telling place, stories. big those the stories, what care

community. all the campaign of the really shaping and of how so, and that exciting seeing around and communicate and our our Olympics is with is And the we we how success broadening about Olympics aperture connect think marketing the

our conclude session. Q&A will That

I to for So, further back it will any Trina remarks. pass over

quarter Thank you hopefully We'll Philly third you. all for joining week. call. Thank in see you next our

call. you your concludes That Thank today's participation. for

now may lines. You your disconnect