Q1 2024 Figs Inc Earnings Call
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Jayla: Good afternoon. Thank you for attending today's FIGS first quarter 2024 earnings conference call. My name is Jayla, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. I'd now like to turn the call over to our host, Jean Fontana. Please go ahead.
Good afternoon. Thank you for attending today's fix first quarter 2024 earnings Conference call. My name is Jamie and I'll be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end I would now like to turn the call.
Jayla: Over to our host Jean Fontana. Please go ahead.
Jean Fontana: Good afternoon, and thank you for joining today's call to discuss FIGS first quarter 2024 results, which we released this afternoon and can be found in our earnings press release and in the stockholder presentation posted on our investor relations website at ir.wherefigs.com. Presenting on today's call are Trina Spear, our co-founder and chief executive officer, and Kevin Fossey, our interim chief financial officer.
Jean Fontana: Good afternoon, and thank you for joining today's call to discuss <unk> first quarter 2024 results, which we released this afternoon and can be found in our earnings press release and in our stockholder presentation posted on our Investor Relations website at IR Dot where things dot com presenting on today's call are Trina sphere.
Jean Fontana: Co founder and Chief Executive Officer, and Kevin phosphate, our interim Chief Financial Officer as a reminder remarks on this call that do not concern past events are forward looking statements. These may include predictions expectations or estimates, including the about future financial performance market opportunity our business plan.
Jean Fontana: As a reminder, remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including about future financial performance, market opportunities, or business plans. Forward-looking statements involve risks and uncertainties, and actual results could differ materially. These and other risks are discussed in our SEC filings, including in the 10Q we filed today, which we encourage you to review. Do not place undue reliance on forward-looking statements, which speak only as of today and which we undertake no obligation to update.
Jean Fontana: Forward looking statements involve risks and uncertainties and actual results could differ materially these and other risks are discussed in our SEC filings, including in the 10-Q, we filed today, which we encourage you to review do not place undue reliance on forward looking statements, which speak only as of today and which we undertake no obligation to update.
Jean Fontana: Right.
Jean Fontana: Finally, we will discuss certain non-GAAP metrics and key performance indicators, which we believe are useful supplemental measures for understanding our business. Definitions and reconciliations of these non-GAAP measures to their most comparable GAAP measures are included in the stockholder presentation we issued today. Now, I'd like to turn the call over to Trina Spear, chief executive officer of FIGS.
Trina: Finally, we will discuss certain non-GAAP metrics and key performance indicators, which we believe are useful supplemental measures for understanding our business definitions in reconciliations to these non-GAAP measures to their most comparable GAAP measures are included in the stockholder presentation. We issued today now I would like to turn the call over to Trina sphere Chief Exec.
Catherine Spear: I could have officer effects.
Catherine Spear: Thank you, Jean. We are pleased with our first quarter results. Net revenues came in at the upper end of our expected range, down less than 1%, and the adjusted EBITDA margin of 10.9% exceeded our expectations. We are especially excited to see improved momentum in our business beginning in mid-March and into the second quarter. Over the last few quarters, we discussed factors that we believed were impacting our performance, and we made changes in response to these challenges. We got back to our roots in delivering incredible product innovation coupled with impactful storytelling centered around the healthcare community. And we're seeing these actions begin to pay off.
Catherine Spear: Thank you gene we are pleased with our first quarter result, net revenues came in at the upper end of our expected range at down less than 1% and adjusted EBITA margin of 10, 9% exceeded our expectation.
Catherine Spear: We were especially excited to see improved momentum in our business beginning in mid March and into the second quarter.
Catherine Spear: Over the last few quarters, we discussed factor that we believed were impacting our performance and we made changes in response to these challenges.
Catherine Spear: We got back to our roots in delivering incredible product and innovation, coupled with impactful storytelling centered around the health care community.
Catherine Spear: Where we're seeing these actions begin to pay off.
Catherine Spear: As we have said in the past, healthcare professionals need their uniforms to perform at their jobs and need to regularly replenish these products. The highly attractive fundamentals of our business are, in large part, due to the repeat frequency dynamics of healthcare apparel. We are seeing these frequency trends begin to stabilize, and we plan to build on this momentum. Reflecting on the business, we are delivering strong performance across our growth strategies, starting with product; we raise the bar on innovation.
Catherine Spear: As we have said in the past healthcare professionals, neither uniforms to perform at their job and need to regularly replenish these product the.
Catherine Spear: The highly attractive fundamentals of our business are in large part due to the repeat frequency dynamics of health care apparel we.
Catherine Spear: We are seeing these frequency trends began to stabilize and we plan to build on this momentum.
Catherine Spear: Reflecting on the business, we are delivering strong performance across our growth strategy.
Catherine Spear: Starting with product, we raise the bar on innovation.
Catherine Spear: Over the last two years, we've bolstered our product team, further building out our design and technical development talent. We've also bolstered our supply chain with best-in-class manufacturing partners. The results of these investments are beginning to bear fruit.
Catherine Spear: Over the last two years, we've bolstered our product team further building out our design and technical development talent.
Catherine Spear: We've also bolstered our supply chain with best in class manufacturing partner. The results of these investments are beginning to bear fruit.
Catherine Spear: In the first quarter, we saw strong engagement generated by new products, including our on-shift Sherpa Bomber Jacket, Seville Scrub Legging, and Isabel Wide Leg Scrub Pants. Notably, these launches also created demand for our core assortment. This is just the beginning.
Catherine Spear: In the first quarter, we saw strong engagement generated by new products, including our on shifts Sherpa bomber jacket, Seville, scrub legging and Isabelle wildlife scrub pants.
Catherine Spear: Notably these launches also created demand for our core assortment.
Catherine Spear: We plan to offer a steady stream of true pinnacle products, including new fabrications and categories that will push the limits of anything healthcare professionals have ever seen before. We believe this innovation will bring unprecedented functionality, fit, comfort, and design with greater velocity. The halo from these pinnacle products is also driving demand for our core styles. As part of our Amplified Innovation Strategy, we have made the decision to accelerate the timeline of our initiative to improve fit consistency across our assortment.
Catherine Spear: This is just the beginning we plan to offer a steady stream of true pinnacle products, including new fabrications in categories that will push the limits of anything health care professionals have ever seen before.
Catherine Spear: We believe this innovation will bring unprecedented functionality fit comfort design with greater velocity.
Catherine Spear: Halo from the Pinnacle products is also driving demand for our core style.
Catherine Spear: As part of our amplified innovation strategy, we have made the decision to accelerate the timeline of our initiatives to improve fit consistency across our assortments.
Catherine Spear: We began to introduce our new fit blocks in April and now expect to complete the rollout by October 2024. Our new product innovation will be fused with marketing campaigns rooted in true storytelling, centered on the awesome humans that make up our community. In April, as part of our Xtreme series, we launched our Call of the Wild campaign featuring Dr. Chloe, a veterinarian who operates on the front line of wildlife conservation. The product capsule featured our indestructible scrub overall and scrub jumpsuit, each of which quickly sold out. The collection was made in a new fabrication that's tough on the outside and soft on the inside, providing extra durability, stretch, moisture wicking, and water resistance.
Catherine Spear: We began to introduce our new fit blocks in April and now expect to complete the rollout by October 2024.
Catherine Spear: Our new product innovation will be fused with marketing campaigns and rooted in true storytelling.
Catherine Spear: Centered on the Austin humans that makeup our community.
Catherine Spear: In April as part of our extreme series, we launched our call of the Wild campaign featuring Dr. Chloe a veterinarian who operates on the frontline of Wildlife Conservation.
Catherine Spear: The product capsule featured our indestructible scrub overall and scrub jumpsuit, each of which quickly sold out.
Catherine Spear: The collection was made in a new fabrication, that's tough on the outside and soft on the inside providing extra durability stretch moisture wicking and water resistance.
Catherine Spear: The product launch was amplified by a meticulously executed campaign that celebrated this extraordinary work. The campaign, which we filmed in South Africa, captured the hearts and minds of our community, drawing nine million impressions among a wide range of health care professionals who were in awe of Dr. Chloe's mission. This past Sunday, the Kickoff to Nurses Week, we hosted a celebratory event in New York City with over 100 awesome humans. On Monday, we brought 13 nurses from across the country to ring the opening bell at the New York Stock Exchange in recognition of Nurses Week.
Catherine Spear: Product launch was amplified by a meticulously executed campaign that celebrated this extraordinary work.
Catherine Spear: The campaign, which we filmed in South Africa captured the Hearts and minds of our community drawing 9 million impressions among a wide range of health care professionals or in all of Doctor Chloe admission.
Catherine Spear: This past Sunday the kickoff nurses, we hosted a celebratory event in New York City with over 100, often human.
Catherine Spear: On Monday, we brought 13 nurses from across the country to ring the opening Bell at the New York Stock exchange in recognition of nurses week.
Catherine Spear: We also kicked off our annual I'm a Nurse campaign, which celebrates our incredible nursing community. The momentum we have seen in our recent launches illustrates the opportunity we have to truly lead with brand storytelling. At Figs, we obsess over customer journeys and look at the full marketing funnel to meet our community members where they are. We have an amazing community, and we provide the platform for them to share their stories. Awesome Human Storytelling is not new for us; it's in our DNA.
Catherine Spear: We also kicked off our annual I am a nurse campaign, which celebrates our incredible nursing community.
Catherine Spear: The momentum we have seen in our recent launches illustrates the opportunity we have to truly lead with brand storytelling.
Catherine Spear: At <unk>, we obsess over customer journey and look at the whole marketing funnel to meet our community members where they are.
Catherine Spear: We have an amazing community and we provide the platform for them to share their stories.
Catherine Spear: Awesome human storytelling is not new for us it's in our DNA and as we look ahead, we have a huge opportunity to deliver more tentpole brand defining campaigns and to put more investment behind top of the funnel initiatives.
Catherine Spear: And as we look ahead, we have a huge opportunity to deliver more memorable, brand-defining campaigns and to put more investment behind top-of-the-funnel initiatives. In parallel, we will continue to focus on the unique needs and interests of health care professionals and effectively move customers through a full journey, driving not only awareness but also consideration and conversion, ensuring that each marketing touchpoint builds on the last. This approach will lead to greater brand engagement among new, lapsed, and existing customers and fuel growth and profitability.
Catherine Spear: In parallel we will continue to focus on the unique needs and interests of health care professionals and effectively move customers through a full journey driving not only awareness, but also consideration and conversion ensuring that each marketing touch point builds on the law.
Catherine Spear: This approach will lead to greater brand engagement, among new and lapsed in existing customers and fuel growth and profitability.
Catherine Spear: Based on our recent strong momentum, we're further leaning in and taking bigger and bolder steps to grow our community globally across channels. This means we're strategically ramping investments primarily around brand marketing in response to the encouraging trends we're seeing in the U.S. market, strong momentum in our international business, and a growing network of institutions joining our team's platform. International net revenues grew 29% in the first quarter compared to last year, reflecting the reclassification of duty subsidies, which negatively impacted net revenue growth by 11 percentage points.
Catherine Spear: Based on our recent strong momentum will further leaning in and taking bigger and bolder steps to grow our community globally across channel.
Catherine Spear: This means we're strategically ramping investments primarily around brand marketing in response to the encouraging trends, we're seeing in the U S market strong momentum in our international business and a growing network of institutions, joining our team's platform.
Catherine Spear: International net revenues grew 29% in the first quarter compared to last year, reflecting the reclassification of duty subsidies, which negatively impacted net revenue growth by 11 percentage points.
Catherine Spear: We continue to gain traction across the countries we serve and plan to identify new markets where we believe figs can become the leader in healthcare apparel. Similar to the building blocks of our success in the US, our global marketing strategy focuses on full-funnel storytelling with investments in our ambassador program, digital marketing, and localized e-commerce experiences. Turning to Teams, we made investments in building foundational ordering experiences for two of our largest Teams customers with the development of the AYA gifting platform and the VEJ stipend experience.
Catherine Spear: We continue to gain traction across the countries, we serve and plan to identify new market, where we believe <unk> can become the leader in health care apparel.
Catherine Spear: Similar to the building blocks of our success in the U S. Our global marketing strategy focuses on all funnel storytelling with investments in our ambassador program digital marketing and localized e-commerce experiences.
Catherine Spear: Turning to team.
Catherine Spear: We made investments in building foundational ordering experiences for two of our largest teams customers with the development of the IAA gifting platform and the beds that have been experienced.
Catherine Spear: Looking ahead, we're eager to evolve and amplify these and other ordering platforms with the support of an outbound sales team and digital marketing effort in order to serve more teams in more ways. Finally, with respect to retail, we're incredibly excited by the prospect of being able to serve more healthcare professionals and look forward to the opening of our Philadelphia location. We acknowledge that we're early in our retail journey, and we're learning more each day.
Catherine Spear: Looking ahead, we are eager to evolve and amplified these and other ordering platforms with the support of an outbound sales team and digital marketing effort in order to serve more teams in more ways.
Catherine Spear: Finally, with respect to retail we're incredibly excited by the prospect of being able to serve whorehouse care professionals and look forward to the opening of our Philadelphia location.
Catherine Spear: We acknowledge that we're early in our retail journey and we're learning more each day.
Catherine Spear: We remain committed to our test, learn, apply, and win approach with locations and formats, and do not currently plan to meaningfully accelerate new hub openings until we can achieve key proof points. Operationally, we're on track with our fulfillment center transition designed to support greater scale, increase flexibility and reliability, and deliver greater efficiency. In addition, the foundational work behind this facility will help us to expand and scale our distribution network globally. This will not only support our growth but enable us to deliver a superior customer experience across geographies.
Catherine Spear: We remain committed to our test learn and apply and win approach with locations and formats.
Catherine Spear: And do not currently plan to meaningfully accelerate new hub opening until we can achieve key proof point.
Catherine Spear: Operationally, we are on track with our fulfillment center transition designed to support greater scale increase flexibility and reliability and deliver greater efficiency.
Catherine Spear: In addition, the foundational work behind this facility will help us to expand and scale our distribution network globally.
Catherine Spear: This will not only support our growth, but enable us to deliver a superior customer experience across geographies.
Catherine Spear: Importantly, we remain committed to delivering incredible brand cultural moments supporting the healthcare community by highlighting the work that they do and by giving back. In January, we opened the Figs Operating Theater in Ukwala, Kenya, a state-of-the-art facility that is the first of its kind in the region.
Catherine Spear: Importantly, we remain committed to delivering incredible brand cultural moment supporting the health care community by highlighting the work that they do and by giving back.
Catherine Spear: In January we opened the big the operating theatre in Kuala Kenya.
Catherine Spear: State of the art facility that is a first of its kind in the region.
Kevin Fossey: It's now creating sustainable change for people in this community who previously had to drive hours to receive surgical care. As we look to the remainder of 2024, we believe we're on the right path to reignite the excitement and word-of-mouth dynamics that propelled us to a leadership position in the industry. We're seeing the trends move in a positive direction, and we're strategically investing in that momentum while remaining disciplined in controlling our expenses.
Catherine Spear: Let's now creating sustainable change for people in this community, who previously had to dry hours.
Kevin Fossey: To receive surgical care.
Kevin Fossey: As we look to the remainder of 2024, we believe we are on the right path to reignite excitement and word of mouth dynamic that propelled us to a leadership position in the industry.
Kevin Fossey: We're seeing the trends move in a positive direction and we are strategically investing in that momentum while remaining disciplined in controlling our expenses.
Kevin Fossey: The long-term growth outlook of the healthcare industry and favorable replenishment dynamics, coupled with our strong debt-free balance sheet and robust cash flow generation, provide a solid foundation to execute and invest in our growth plan. As the distant leader in health care apparel, we recognize the urgent need to serve health care professionals, and we are at the forefront of this effort. Now, I will pass it over to Kevin Fossey to discuss our financial results and provide an update on our outlook.
Kevin Fossey: The long term growth outlook of the health care industry and favorable replenishment dynamics.
Kevin Fossey: With our strong debt free balance sheet and robust cash flow generation provide a solid foundation to execute and invest in our growth plan.
Kevin Fossey: As the distant leader in health care apparel, we recognize the urgent need to serve health care professionals and we are at the forefront of this effort now.
Kevin Fossey: Now I will pass it over to Kevin phosphate to discuss our financial results and provide an update on our outlook.
Kevin Fossey: Thank you, Trina. For the first quarter, net revenues came in at the upper end of our guidance range, while adjusted EBITDA margin exceeded our expectations, yielding strong free cash flow generation. We were also encouraged to see improving trends, particularly around repeat frequency, indicating that our product and marketing strategies are gaining traction. With a steadfast commitment to serving the healthcare community, we are highly optimistic about our ability to drive accelerated growth into the future.
Kevin Fossey: Thank you Trina for the first quarter net revenues came in at the upper end of our guidance range, while adjusted EBITDA margin exceeded our expectations, yielding strong free cash flow generation.
Kevin Fossey: We were also encouraged to see improving trends, particularly around repeat frequency, indicating that our product and marketing strategies are gaining traction.
Kevin Fossey: With our steadfast commitment to serving the health care community. We are highly optimistic about our ability to drive accelerated growth into the future.
Kevin Fossey: While margins are expected to be impacted in the short term, we are confident that these investments will not only drive higher net revenue growth in the future but also stronger and more sustainable profitability. I will begin my discussion with a detailed review of our first quarter results, followed by an update on our financial outlook, starting with our first quarter results. Net revenues decreased 0.8% to $119.3 million as compared to Q1 last year.
Kevin Fossey: While margins are expected to be impacted in the short term. We are confident that these investments will not only drive a higher net revenues growth in the future, but also stronger and more sustainable profitability.
Kevin Fossey: I will begin my discussion with a detailed review of our first quarter results followed by an update on our financial outlook.
Kevin Fossey: Net revenues reflect $1.4 million in contra revenue associated with duty subsidies paid for international customers. As a reminder, duty subsidies were recorded as selling expense in last year's first quarter. Active customers for the trailing 12-month period increased 8.6% compared to the same period last year.
Kevin Fossey: Starting with our first quarter results.
Kevin Fossey: Net revenues decreased <unk>, 8% to $119 $3 million as compared to Q1 last year net revenues reflect $1 $4 million in contra revenue associated with duty subsidies paid for international customers. As a reminder, duty subsidies were recorded as selling expense than last year.
Kevin Fossey: <unk> first quarter.
Kevin Fossey: Active customers for the trailing 12 months period increased eight 6% compared to the same period last year.
Kevin Fossey: Average order value increased 1.8% to $116 in the first quarter, reflecting higher AUR due to product mix and higher UPTs. However, net revenues per active customer on a trailing 12-month basis decreased 2.8% to $210 versus the same period last year. These metrics reflect the aforementioned international duty subsidies, which negatively impacted both AOV and net revenues per active customer growth by approximately 1 percentage point each. Looking at product categories, non-scrubs grew 9%, reaching 20.5% of net revenues.
Kevin Fossey: Average order value increased one 8% to $116 in the first quarter, reflecting higher AUR due to product mix and higher <unk> net revenues per active customer on a trailing 12 month basis decreased two 8% to $210 versus the same period last year. These men.
Kevin Fossey: <unk> reflect the aforementioned international duty subsidies, which negatively impacted both <unk> and net revenues per active customer growth by approximately one percentage point each looking at product categories. Non scrubs grew 9%, reaching 25% of net revenues.
Kevin Fossey: Gross margin for Q1 was 68.9% compared to 71.3% in Q1 of 2023. The decline in gross margin rate was primarily due to product mix shifts. Selling expense for Q1 was $28.5 million, representing 23.9% of net revenues compared to 25.9% in Q1 2023. The decrease in selling expense as a percentage of net revenues primarily reflects duty subsidies that were recorded in selling expense last year and are now reflected in net revenues as contra revenue.
Kevin Fossey: Gross margin for Q1 was 68, 9% compared to 71, 3% in Q1 of 2023 the decline in gross margin rate was primarily due to product mix shift.
Kevin Fossey: Selling expense for Q1 was $28 $5 million, representing 23, 9% of net revenues compared to 25, 9% in Q1 2023.
Kevin Fossey: The decrease in selling expense as a percentage of net revenues primarily reflects duty subsidies that were recorded in selling expense last year and are now reflected in net revenues as contra revenue.
Kevin Fossey: These costs were partially offset by startup costs associated with the transition of our Fulfillment Center to a new facility. As Trina mentioned, the new facility will enable greater efficiencies and set the foundation to expand our distribution network. Please note transitory costs related to the Fulfillment Enhancement Project came in below our expectations, in part due to a timing shift into the second quarter, and in part due to lower-than-expected startup costs. Marketing expense for Q1 was $17.2 million, representing 14.5% of net revenues compared to 14.2% in Q1 2023. The increase in marketing expense as a percentage of sales was largely due to an increased mix in international marketing expense.
Kevin Fossey: These costs were partially offset by startup costs associated with the transition of our fulfillment center to a new facility.
Kevin Fossey: As <unk> mentioned, the new facility will enable greater efficiencies and set the foundation to expand our distribution network.
Kevin Fossey: Please note transitory costs related to the fulfillment enhancement project came in below our expectations.
Kevin Fossey: Due to a timing shift into the second quarter and in part due to lower than expected startup costs.
Kevin Fossey: Marketing expense for Q1 was $17 2 million, representing 14, 5% of net revenues compared to 14, 2% in Q1 2023 of the increase in marketing expense as a percentage of sales was largely due to an increased mix in international marketing spend.
Kevin Fossey: G&A for Q1 was $36 million, representing 30.2% of net revenues compared to 28.4% in Q1 2023. The increase in GNA as a percentage of sales was largely due to the continued investments in people. This was partially offset by a decrease in legal fees, a lower accrual for charitable donations, and reduced professional fees versus last year.
Kevin Fossey: G&A for Q1 was $36 million, representing 32% of net revenues compared to 28, 4% in Q1 2023.
Kevin Fossey: The increase in G&A as a percentage of sales was largely due to the continued investments in people.
Kevin Fossey: This was partially offset by a decrease in legal fees lower accrual for charitable donations and reduced professional fees versus last year.
Kevin Fossey: Taking this to the bottom line, first quarter net income was $1.4 million, or diluted EPS of one cent. First quarter 2023 net income was $1.9 million, or one cent in diluted EPS. Adjusted EBITDA for Q1 was $13 million, with an adjusted EBITDA margin of 10.9% compared to 13.4% in Q1. Touching on our balance sheet, we finished the first quarter with cash and cash equivalents, and short-term investments of $259.2 million. Inventory declined 28% to $130.5 million versus Q1 last year as we continue to make progress in bringing our inventory back to normalized levels. Overall, we are very comfortable with the composition of our inventory.
Kevin Fossey: Taking this to the bottom line first quarter net income was $1 $4 million or diluted EPS of one set first quarter 2023, net income was $1 $9 million or <unk> and diluted EPS adjusted.
Kevin Fossey: EBITDA for Q1 was $13 million with an adjusted EBITDA margin of 10, 9% compared to 13, 4% in Q1 2023.
Kevin Fossey: Touching on our balance sheet, we finished the first quarter with cash and cash equivalents and short term investments $259 $2 million.
Kevin Fossey: Inventory declined 28% to $135 million versus Q1 last year as we continued to make progress in bringing our inventory back to normalized levels. Overall, we are very comfortable with the composition of our inventory.
Kevin Fossey: Capital expenditures for the first quarter totaled $4.5 million, largely associated with the fulfillment transition project. And finally, we delivered strong free cash flow of $11.1 million in the first quarter. Turning to our outlook, based on recent performance and the positive impact from our brand initiatives we have in place, we are raising our full year net revenue outlook from negative 2% to positive 2% as compared to 2023 and versus prior guidance of down 5% to flat.
Kevin Fossey: Capital expenditures for the first quarter totaled $4 $5 million. This is largely associated with the fulfillment transition project.
Kevin Fossey: And finally, we delivered strong free cash flow of $11 $1 million in the first quarter.
Kevin Fossey: Turning to our outlook based on recent performance and the positive impact from our brand initiatives. We have in place we are raising our full year net revenues outlook to negative 2% to positive, 2% as compared to 2023 and versus prior guidance of down 5%.
Kevin Fossey: Flat.
Kevin Fossey: As a reminder, we expect Q3 to be the toughest year-over-year comparison in terms of net revenues growth, primarily due to the anniversary of last year's highly successful sample sale in September. Our gross margin outlook for the year is unchanged and expected to be in line with our 2023 gross margin rate. We are committed to enhancing product innovation through new fabrications, advanced features, and designs tailored to meet the needs of healthcare professionals with premium products at exceptional value, which may impact gross margin rate in the short term, but we are confident that we will drive higher margins in the long term. First, as we expand and diversify our fabrications and product categories, we anticipate realizing economies of scale over time. Subsequently, mirroring the margin trajectory delivered by our core Scrubware and Phionix lines over the years.
Kevin Fossey: As a reminder, we expect Q3 to be the toughest year over year comparison in terms of net revenues growth primarily due to the anniversary of last year's highly successful sample sale in September.
Kevin Fossey: Our gross margin outlook for the year is unchanged and expected to be in line with our 2023 gross margin rate. We are committed to enhancing product innovation through new fabrications advanced features and design tailored to meet the needs of health care professionals with premium products at exceptional value.
Kevin Fossey: <unk>.
Kevin Fossey: Which may impact gross margin rate in the short term, but we are confident that we will drive a higher margin long term.
Kevin Fossey: First as we expand and diversify our fabrications in product categories, we anticipate realizing economies of scale over time.
Kevin Fossey: Subsequently mirroring the margin trajectory delivered by our core scrub were on fire and X lines over the years and second we expect new innovation to also drive our higher margin core business also note that we expect that duty drawback benefit anticipated for later this year to offset some of the headwind from new product.
Kevin Fossey: And second, we expect new innovation to also drive our higher margin core business. Also note that we expect the duty drawback benefit anticipated for later this year to offset some of the headwind from new product innovation. Turning to selling expenses, total transitory costs associated with our Fulfillment Enhancement Project are now estimated to be approximately $13 million, slightly below our previous expectation of $14 million. We expect to realize the bulk of these transitory expenses in the second quarter.
Kevin Fossey: <unk>.
Kevin Fossey: Turning to selling expense total transitory costs associated with our fulfillment enhancement project are now estimated to be approximately $13 million slightly below our previous expectation of $14 million.
Kevin Fossey: We expect to realize the bulk of these transitory expenses in the second quarter.
Kevin Fossey: Note that a portion of fulfillment costs that we assume would fall in the first quarter shifted to the second quarter. We anticipate the transition to be largely complete by the end of the third quarter. With respect to marketing spend, we plan to increase our investment as a percentage of net revenues as we build on our momentum. The majority of the higher investment will be incurred in the third quarter, coinciding with a large-scale brand campaign.
Kevin Fossey: Note that a portion of fulfillment costs that we assume would fall in the first quarter shifted to the second quarter.
Kevin Fossey: We anticipate the transition to be largely complete by the end of the third quarter.
Kevin Fossey: With respect to marketing spend we plan to increase our investment as a percentage of net revenues as we build on our momentum the majority of the higher investment will be incurred in the third quarter, coinciding with a large scale brand campaign.
Kevin Fossey: With respect to GNA, we plan to maintain investments in key areas of our business, particularly in talent, while carefully managing expenses to identify savings opportunities. As a result of these factors, the adjusted EBITDA margin for full year 2024 is now expected to be between 9.5% and 10.5%. This reflects approximately 220 basis points of cost headwind from the transitory portion of our fulfillment project. Turning to our second quarter 2024 outlook, we expect net revenue growth of between 3% and 4%.
Kevin Fossey: With respect to G&A, we plan to maintain investments in key areas of our business, particularly in talent, while carefully managing expenses to identify savings opportunities.
Kevin Fossey: As a result of these factors adjusted EBITDA margin for full year 2024 is now expected to be between nine 5% and 10, 5%.
Kevin Fossey: This reflects approximately 220 basis points of cost headwind from the transitory portion of our fulfillment project.
Kevin Fossey: Turning to our second quarter 2024 outlook, we expect net revenues growth of between 3% and 4%.
Kevin Fossey: We expect gross margin to be down versus Q2 last year, largely due to a product mix shift. Importantly, while there may be fluctuations in the short term, we aim to maintain a healthy margin rate while also making the right investments in our long-term growth, such as operating expenses. For selling expense, we expect a de-leverage of approximately 330 basis points, which takes into account higher transitory and ongoing fulfillment costs. As a result, we expect the second quarter adjusted EBITDA margin to be approximately 8.5%.
Kevin Fossey: We expect gross margin to be down versus Q2 last year, largely due to a product mix shift.
Kevin Fossey: Importantly, while there may be fluctuations in the short term, we aim to maintain a healthy margin rate, while also making the right investments in our long term growth.
Kevin Fossey: Looking at operating expenses for selling expense, we expect deleverage of approximately 330 basis points, which takes into account higher transitory and ongoing fulfillment costs.
Kevin Fossey: As a result, we expect second quarter adjusted EBITDA margin to be approximately eight 5%.
Kevin Fossey: Our capital expenditures expectation for 2024 continues to be between $18 and $19 million, including $13 to $14 million in fulfillment enhancement related costs. In closing, we're delighted to see the positive trends in our business. Moving forward, we'll continue to capitalize on our robust balance sheet and cashflow dynamics to strategically invest in our future growth. With that, I will turn it over to the operator to kick off our Q&A session.
Kevin Fossey: Our capital expenditures expectation for 2024 continues to be between 18, and $19 million, including $13 million to $14 million in fulfillment enhancement related costs.
Kevin Fossey: In closing, we're delighted to see the positive trends in our business moving forward, we will continue to capitalize on our robust balance sheet and cash flow dynamics to strategically invest in our future growth.
Speaker Change: With that I will turn it over to the operator to kick off our Q&A session operator.
Operator: We will now begin our question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by. Again, to ask a question, press star 1. As a reminder, if you use a speakerphone, please remember to pick up your handset before asking a question. We'll pause briefly here if any questions arise. Our first question comes from Brian Nagel with the company Oppenheimer. Brian, your line is now open.
Speaker Change: We will now begin our question and answer session if you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by tube.
Operator: To ask a question press star one as a reminder.
Brian William Nagel: Speakerphone, please pick up your handset before asking a question.
Brian William Nagel: We'll pause briefly ask questions registered.
Operator: Our first question comes from Brian Nagel with a company Oppenheimer. Brian Your line is now open.
Brian William Nagel: Hi, good afternoon.
Brian William Nagel: First off congratulations on the.
Brian William Nagel: Picked up in your business lately.
Brian William Nagel: First off, congratulations on the pick-up in your business lately. The first question I want to ask is, just with regard to the, I guess, you know, the adjustments to the guidance and then the discussion around the investments there. So the question is, the way I wanna ask it is, you know, as we think about, so you're taking revenue guidance up, but EBITDA margin guidance down.
Brian William Nagel: Thanks, Brian the first question I wanted to ask the first question I wanted to ask just with regard to the.
Brian William Nagel: I guess, there would be adjustments to the guidance.
Brian William Nagel: And then the discussion around the investments there.
Brian William Nagel: The question is what I want to ask it is as we can.
Brian William Nagel: The balance sheet, you're taking revenue guidance up EBITDA margin guide again sure.
Brian William Nagel: So are these incremental investments, are you looking at them more as a kind of a shorter-term dynamic to capitalize upon this improving trend? Or is this something that's going to basically change the cost of doing business for figs over a longer period of time?
Brian William Nagel: Are these.
Brian William Nagel: Incremental investments you are looking at them more as a kind of a shorter term dynamic to capitalize upon this improving trend.
Brian William Nagel: Yes.
Brian William Nagel: Is this something that's going to basically change the cost of doing business for rigs over a longer period of time.
Speaker Change: Sure. Thanks, Brian So I think as you know the fundamentals of our business have always been highly attractive at the center of that is the metric of repeat frequency.
Catherine Spear: Sure. Thanks, Brian.
Catherine Spear: So I think, you know, as you know, the fundamentals of our business have always been highly attractive. At the center of that is the metric of repeat frequency. By the nature of what we sell, uniforms, and who we sell to, health care professionals, we naturally benefit from frequent replenishment. And so we saw, you know, in the second half of March going into Q2, we saw these trends improve, and we really are attributing that to strong engagement around our product launches combined with the marketing campaigns that we put out that have all been centered around the health care community.
Catherine Spear: By the nature of what we sell uniforms and who we sell to health care professionals, we naturally benefit from frequent replenishment and so we saw in the second half of March going into Q2, we saw these trends improve and we really are attributing that to.
Catherine Spear: The strong engagement around our product launches combined with the marketing campaign that we put out that have all been centered around the health care community and so that is where we're seeing the dynamic shifts and why we're increasing our revenue guidance for the year, we are being prudent given it's still early days.
Catherine Spear: And so, you know, that is where we're seeing the dynamic shift and why we're increasing our revenue guidance for the year. We are being prudent, given it's still early days, but we're seeing this dynamic working between product and marketing coming together. We're investing behind that, and that's where you see the EBITDA guidance. We're bringing that down, and that can be almost fully attributed to this increase in brand marketing spend that is, very much, a short-term dynamic as we continue to invest in what's working, as we continue to scale and build the business to a billion dollars and beyond.
Catherine Spear: Got it. That's helpful, Trina.
Catherine Spear: And.
Catherine Spear: We're seeing this dynamic working between product and marketing coming together, we're investing behind that and that's where you see the EBITDA guidance, we're bringing that down and that can be almost fully attributed to the increase.
Catherine Spear: Increase in brand marketing spend that very much is a short term dynamic as we continue to invest in what's working as we continue to scale and build the business to $1 billion and beyond.
Catherine Spear: Then the second question I have, just on the gross margin, so I guess gross margin is tracking a little bit weaker than the forecast out there. You're guided to be down, but you talked about the product mix shift. Is that, was that, a shorter-term dynamic too, or is that something we should expect to pursue?
Speaker Change: Got it that's helpful. The second question I have just on the gross margin so.
Catherine Spear: And I guess gross margin drag a little bit weaker than that.
Catherine Spear: Forecasts out there you'd guided to be down, but you talked about the product mix shift.
Catherine Spear: Was that a shorter term dynamic you or is that something we should expect that to persist.
Catherine Spear: So, as we shift into building out our categories, building out fabrications, in addition to raising the bar on quality as it relates to our features and trends, there may be some higher product cost associated with that, but it's really a short-term dynamic because, as you've seen with FineX, with our core scrubware over the years, we get economies of scale over time. And so, we look to see that in our new innovation.
Catherine Spear: So as we shift into building out our categories building out fabrications and Intel and.
Catherine Spear: In addition to raising the bar on quality as it relates to our features and trends there may be some higher product costing associated with that but it's really a short term dynamic because as you've seen with <unk> with our core scrubber over the years, we get economies of scale.
Catherine Spear: Overtime, and so we look to see that in our new innovation, we look to see a similar margin curve over time that we saw with core scrubber.
Catherine Spear: We look to see a similar margin curve over time that we saw with core scrubware. And so, it's all about balancing and gaining leverage from that core to invest in the future of the business, invest in innovation. And so, the gross margin this year and beyond, that's kind of how we think about it.
Catherine Spear: And so it's all about balancing and gaining leverage from that core to invest in the future of the business invest in innovation and so that.
Catherine Spear: Gross margin this.
Catherine Spear: This year and beyond that's kind of how we think about it.
Catherine Spear: Got it. I appreciate it. Thank you.
Speaker Change: Got it appreciate it thank you.
Catherine Spear: Yeah.
Speaker Change: Thank you.
Rakesh Babarbhai Patel: Our next question comes from Rick Patel with the company Raymond James. Rick, your line is now open.
Catherine Spear: Our next question comes from Rick Patel with accompanying Raymond James Your line is now open.
Catherine Spear: Thanks, good afternoon, and well done on the new innovation here. I'm hoping you can provide some additional color on the shape of revenue growth that you gave. So can you help us with the building blocks for how that growth is achieved as we think about growth in active customers versus frequency and AOV?
Rakesh Babarbhai Patel: Thanks, Good afternoon, and well done on the new innovation here.
Catherine Spear: I'm, hoping you can provide some additional color on the on the shape of revenue growth that you gave so can you help us with the building blocks for how that growth is achieved as we think about.
Catherine Spear: With an active customers versus frequency and <unk>.
Speaker Change: Sure. So as you've seen we've had a number of gains from let's start with <unk>.
Catherine Spear: Sure. So, as you've seen, we've had a number of gains from, let's start with AOV. You know, AOV was $94 in 2019. And we finished this last quarter at $116.
Catherine Spear: Hi.
Catherine Spear: <unk> was $94 in 2019.
Catherine Spear: We finished the quarter at $116, that's a function of both AUR and <unk> So AUR.
Catherine Spear: That's a function of both AUR and UPT. So, AUR is driven by really building out our layering system. You're seeing footwear, outerwear, and Figs Pro all have higher retail MSRPs, and so that's driving AOV growth as well as UPT. And just to add to this, I think it's really important to note that innovation is a key piece to this. Our limited edition scrubware has doubled in the past year, and our non-scrubware business was 18.6% of the business last year. It's 20.5% as of this past quarter.
Catherine Spear: <unk> is driven by really building out our layering system Youre seeing footwear outerwear fixed all have higher retail MSRP and so that's driving <unk> growth as well as <unk>.
Catherine Spear:
Catherine Spear: And just to add to this I think it's really important to note that the innovation is a key piece to that the our limited edition scrubber has doubled in the past year and our non scrubber.
Catherine Spear: With that it was 18, 6% of the business last year at 25% as of this past quarter, and so really seeing innovation really seeing the diversification across category.
Catherine Spear: And so we're really seeing innovation, really seeing this diversification across categories to move beyond an e-com scrubs business. We're diversifying by category, by fabrication, and by channel and geography. And all of that is really important as we aim to be an iconic brand over the next 100 years. As relates to the guide, there'll be a modest increase from an active customer perspective, and it actually assumes repeat is down. And so we are being prudent as we're seeing some gains there.
Catherine Spear: To move beyond an E com scrubber business, we're diversifying by category by fabrication diversifying by channel and geography, and all of that is really important as we aim to be an iconic brand over the next 100 years.
Catherine Spear: As it relates to the guide there'll be a modest increase from an active customer perspective.
Catherine Spear: And it actually assume is repeat is down and so we are being prudent and as we're seeing some gains there.
Catherine Spear: Great.
Catherine Spear: Great. Can you also talk about the potential to chase demand for the innovation that is working? I know inventory is down 28% and it's where you want it to be overall, but do you have the right inventory to meet the demand for the newer products that you've launched?
Catherine Spear: And can you also talk about the potential to chase demand for the innovation that is working.
Catherine Spear: Inventory is down 28%.
Catherine Spear: Do you want it to be overall, but do you have the right inventory to meet the demand for the newer products that you've launched.
Catherine Spear: Yeah, we feel really good about our inventory balance. As you know, we've made incredible strides over the last year, down 28% year over year, and it will continue to decline on a year over year basis every quarter through the end of the year. And we do feel like we have the right inventory across our core, across our limited edition styles, across our pinnacle pieces that have come in, and it's been, I don't know if you saw our indestructible capsule launch. It's killer.
Catherine Spear: Yeah, we feel really good about our inventory balance as you know we've made incredible strides over the last year down 28% year over year.
Catherine Spear: It will continue to decline on a year over year basis every quarter through the end of the year.
Catherine Spear: And we do feel like we have the right inventory across our core across our limited edition styles across our pinnacle pieces that have come in and its been I don't know if you saw our indestructible capsule launch its killer yourself, a really exciting things to come and I think that.
Catherine Spear: So really exciting things to come. And I think that, you know, but we're nimble, right? And so we've seen a number of key launches in the first quarter, our Sherpa Bomber, our Scrub Legging, our Wide Leg Pants. And there are a number of pieces I can't say right now, because if our healthcare professionals are listening, they'll get too excited. But we're chasing, we're nimble, we're adjusting as we see that demand, we're adjusting as we see that excitement. Thank you.
Catherine Spear: But we're nimble right and so we've seen a number of key launches in the first quarter are.
Catherine Spear: Our sherpa bommer, our scrubber lagging our wide leg pants.
Catherine Spear: And there is a number of pieces I can't say right now because if our health care professionals are lifting youll get too excited but we're chasing we're nimble we're adjusting as we see that demand we're adjusting as we see that excitement.
Speaker Change: I appreciate the details thank you.
Lorraine Hutchinson: I appreciate the details. Thank you. Thank you. Thank you. Our next question comes from Lorraine Hutchinson with the company Bank of America. Lorraine, your line is now open.
Catherine Spear: Okay.
Lorraine Corrine Maikis Hutchinson: Thank you.
Lorraine Hutchinson: Our next question comes from Lorraine Hutchinson with the company Bank of America. Lorraine, your line is now open. Thank you. Good afternoon. I just wanted to follow up on the brand marketing increase that you're
Lorraine Corrine Maikis Hutchinson: Thank you.
Lorraine Hutchinson: Our next question comes from Lorraine Hutchinson with a company Bank of America. Your line is now open.
Lorraine Corrine Maikis Hutchinson: Thank you good afternoon I just wanted to follow up on the brand marketing increase that youre doing in the third quarter.
Lorraine Hutchinson: You spoke earlier about it being a shorter term dynamics. So when we think about 25% and 26 should we expect marketing to come back down or would you expect to be growing revenue sufficiently to just have that.
Lorraine Corrine Maikis Hutchinson: That cost percentage decline naturally.
Catherine Spear: So, what I'll say is that we're really making this brand investment intentionally. We're focusing on the spend on what's working. We're seeing new customers. We're seeing these improved frequency trends. So, we're leaning in.
Lorraine Corrine Maikis Hutchinson: So what I'll say that we're really making this brand investment intentionally.
Catherine Spear: Focusing on the spend on what's working and we're seeing the new customers were seeing these improved frequency trends. So we're leaning in and we believe that this is going to drive higher growth paving the way for long term profitability.
Catherine Spear: And we believe that this is going to drive higher growth, paving the way for long-term profitability. We are a growth company. So, what we've done is we've looked across the marketing funnel, and we're making concerted efforts to right-size our spend across upper and mid-funnel tactics. And because we do believe we shifted away from this over the past year or so. So I do think what you'll see is that this is going to drive growth and increase profitability over the long run.
Catherine Spear: Are a growth company. So what we've done is we've looked across the marketing funnel and we're taking concerted efforts to rightsize, our spend across upper and mid funnel tactics and because we do believe we shifted away from this over the past year or so so.
Catherine Spear: So I do think what Youll see is that.
Catherine Spear: This is going to drive.
Catherine Spear: Growth and it's going to drive profitability over the long run, but these are longer term types of investment and there is an interesting stat from a consumer landscape industry perspective, upper funnel marketing investments drive awareness that lead to high quality organic traffic, which converts three.
Catherine Spear: But these are longer-term types of investments. And there's an interesting stat from a consumer landscape industry perspective. Upper funnel marketing investments drive awareness that leads to high-quality organic traffic, which converts three times higher than traffic driven directly from paid ads. This is an important dynamic that we're excited to lean heavier into. So we're leveraging that spend to continue to show up and engage our community. Ultimately, this is going to equate to retaining our customers and bringing more health care professionals into the fold. And as we go into 2025 and 2026, we'll update you as we go. Thank you. Thank you, Brian.
Catherine Spear: Times higher and traffic driven directly from paid ads. This is an important dynamic.
Catherine Spear: We're excited to lean heavier into.
Catherine Spear: So we're leveraging that spend to continue to show up and engage our community. Ultimately this is going to equate to retaining our customers and bringing more health care professionals into the fold.
Catherine Spear: As we go into 2025 and 2026.
Catherine Spear: We will update you as we go.
Speaker Change: Thank you.
Speaker Change: Thank you Robyn.
Ashley Owens: Our next question comes from Ashley Owens with the company KeyBank Capital Markets. Ashley, your line is now open. Hi, thanks for taking my question. This is Chandon and Madaka on for Ashley today. So I just kind of wanted to ask
Catherine Spear: Our next question comes from Ashley <unk> with the company Keybanc capital markets. Ashley Your line is now open.
Speaker Change: Hi, Thanks for taking my question. This is Jonathan on the dotcom crash in today. So I just kind of wanted to ask him to initiatives could we dig a bit.
Speaker Change: Deeper into the initiatives behind that that began launching in April where it's been rolled out already and where you're planning to complete by October.
Speaker Change: Sure. Thank you for the question.
Catherine Spear: Sure. Thank you for the question. So delivering consistent fit across our assortment is a non-negotiable. This has been something that's been underway for quite some time. But being able to have your uniform fit the same way every time, what you ordered six months ago as a healthcare professional, maybe you ordered the Caterina top and the Yola pant, two of our best-selling items, and you come back six months later, it has to fit exactly the same as long as, you know, your body hasn't changed.
Speaker Change: So delivering consistent fit across our assortment is a non negotiable. This has been something that's been underway for quite some time, but being able to have your uniform set the same way every time.
Catherine Spear: Ordered six months ago, as a health care professional maybe order of the Catarina top and <unk>.
Catherine Spear: Two of our best selling items and you come back six months later and it has to fit exactly the same as long as your body didn't change. So is there a really important initiative and we believe this transition is going to help improve repeat frequency and retention and.
Catherine Spear: So this is a really important initiative, and we believe this transition is going to help improve repeat frequency and retention. And we really want to ensure that we're delivering the best experience to our healthcare community at all times.
Catherine Spear: And we really wanted to ensure that we're delivering the best experience to our health care community at all times.
Catherine Spear: We expect inventory, like I said, to continue to decrease on a year-over-year basis for the remainder of the year, even with the pull forward of inventory related to the fit transition. And as we monitor selling trends, we're going to manage our inventory levels accordingly. But, as I said, we do feel like we're in a very healthy position today.
Catherine Spear: We expect inventory like I said it to continue to decrease on a year over year basis for the remainder of the year, even with the pull forward of inventory related to the fit transition.
Catherine Spear: And as we monitor our selling trends, we're going to manage our inventory levels accordingly, but like I said, we do feel like we're in a very healthy position today, it's why we're able to bring in all of this newness and innovation that we're really excited about.
Ashley Owens: It's why we were able to bring in all of this newness and innovation that we're really excited about. And then, just kind of following up on that inventory piece, could you please provide us with a refresh on maybe your expected promotional cadence you're planning for this year now that it's at a more normalized level? So how are you thinking about that? We're gonna continue to be disciplined around our promotional cadence, and we're gonna continue to really utilize promotions in a very celebratory way.
Speaker Change: Awesome. Thank you and then just kind of following up on that inventory piece could you provide us with a refresh on maybe youre expected promotional cadence you're planning for this year and all that it's at a more normalized level. So how are you thinking about that.
Ashley Owens: We're going to continue to be disciplined around our promotional cadence and we're going to continue to.
Ashley Owens: Really utilize promotions in a very celebratory way.
Ashley Owens: Right now, it's Nurses Week, which is our Super Bowl, so you see the offer that we have on our site, and it's really about celebrating our community and inspiring the next generation to wanna become them. And so we're gonna be really leaning into those moments and not shifting our cadence from what you've seen in the past and what you will see year over year. Awesome, thank you. Thank you, Ashley. Our next question comes from Nathan Feather with the company Morgan Stanley. Nathan, your line is now open.
Ashley Owens: Right now if Theres this week, which is our Super Bowl also you see.
Nathaniel Feather: The offer that we have on our site and it's really about celebrating our community.
Nathaniel Feather: And inspiring the next generation will want to become then and so we're going to be really leaning into those moments.
Ashley Owens: Hum.
Nathaniel Feather: And not shifting our cadence from what you've seen in the past.
Nathaniel Feather: And what you will see year over year.
Nathaniel Feather: Awesome. Thank you.
Nathaniel Feather: Thank you Ashley.
Nathaniel Feather: Our next question comes from Nathan <unk> with the company Morgan Stanley Nathan Your line is now open.
Nathan Feather: Hey, everyone. Thanks for taking the question.
Nathaniel Feather: Hey, everyone. Thanks for taking the question so you've run to sample sales relatively close to each other at least relative to your historical cadence I guess can you talk to the thought process there what kind of uplift. It generated and then do you expect the <unk> sample sale you ran to pull forward any demand from Q2 similar to the prior.
Nathaniel Feather: Simple thing out in the back half question. Thank you.
Nathaniel Feather: So we do we do a sample sale once a year and we don't look at comp period over period right. So last year was in Q3 of this year. Thank you Juan.
Catherine Spear: We do a sample sale once a year, and we don't look at comp period over period, right? So last year it was in Q3, this year it's in Q1, and, you know, it's really about when we look to do that, when it makes sense to engage our community with that type of exclusivity. You're able to kind of get older styles and older colors, and it's a really exciting time. And so, you know, that's what that was about. I don't believe, also, just given what we're seeing in the trends, that there is going to be a pull forward into Q1 from Q2.
Catherine Spear: It's really about when we look to do that when it makes sense to engage our community with that type of exclusivity, you're able to kind of get older styles and older color then it's a really exciting time and so.
Catherine Spear: That's what that was about.
Catherine Spear: Believe I also just given what we're seeing and the trends that.
Catherine Spear: There is going to be a pull forward into Q1 from Q2.
Speaker Change: Great. Thank you.
Matthew Butler Koranda: Thank you, Nathan. Our next question comes from Matt Koranda with the company Roth MKM. Matt, your line is now open.
Catherine Spear: Thank you Nathan. Thank you. Our next question comes from Matt Koranda with a company Ross and km. Matt. Your line is now open.
Catherine Spear: Hey, thanks for taking the questions. I just wanted to circle in on the purchasing dynamics and the inflection that you saw later in the quarter. So maybe I'd just curious if you could drill down on where you think the inflection is coming from. Is it coming from new customers to the brand? Is it coming from existing active customers that are tightening their purchase cycle? Or is it active customers that basically went dormant for a period of time post-pandemic? Just any detail around that and maybe just to unpack regionality if there is any or any sub-segments among your healthcare professionals.
Matthew Butler Koranda: Hey, Thanks for taking the questions just wanted to circle in on.
Catherine Spear: The purchasing dynamics and the inflection that you saw later in the quarter. So maybe just curious if you can drill down on where you think the inflection is coming from is it coming from new customers to the brand is it coming from existing active customers that are tightening their purchase cycle or is it active customers that basically went dormant.
Catherine Spear: A period of time post pandemic, just any detail around that and maybe just.
Catherine Spear: No.
Catherine Spear: To unpack Regionalisation, if there is any or sub segments among health care professionals.
Catherine Spear: So we've really seen that improvement coming from repeat frequency, right? It's customers, active customers, it's customers that have lapsed, that are coming back, that are so excited by the innovation and so excited by our storytelling. And so, you know, it really does illustrate the power of our plan, the plan that we've spoken about, bringing true innovation combined with impactful storytelling and networking. We believe, and we've always seen in this business, that repeat drives new.
Catherine Spear: So we've really seen that improvement.
Catherine Spear: Coming from the repeat frequency right its customers active customers as customers that have labs that are coming back that are so excited by the innovation and still excited by our storytelling.
Catherine Spear: So that.
Catherine Spear: It really does illustrate the power of our plan the plan that we've spoken about bringing true innovation combined with impactful storytelling and not working we believe and we've always seen in this business that repeat drive repeat frequency repeat customers are walking around their hospitals are walking around their institutions are wearing figs.
Catherine Spear: Repeat customers are walking around their hospitals, walking around their institutions, wearing figs, and acquiring new customers for us. This word-of-mouth dynamic is super powerful. They're in densely populated institutions acquiring customers for us. So as that repeat frequency continues, we'll see kind of a new kind come behind it. And we've seen, you asked about geography, strong frequency and reactivation in both the United States as well as in our international markets. And we're seeing not only with repeat in terms of our active customers but also in terms of a number of other metrics across the business.
Catherine Spear: <unk> customers for us this word of sales dynamic a super powerful during densely populated institution acquiring customers for us. So as that repeat frequency continues we will see that kind of a new kind of come behind it.
Catherine Spear: We've seen you asked about geography, we're seeing strong.
Catherine Spear: Frequency and reactivation boat in both the United States as well as in our international markets.
Catherine Spear: And so and we're seeing not only just with repeat in terms of our.
Catherine Spear: Our active customers, but also in terms of a number of other metrics across.
Catherine Spear: The business.
Speaker Change: Okay. That's helpful. Thanks, Rina and then just in terms of the change to the margin guidance I just wanted to make sure. We're all super clear it sounded like you said gross margin for the full year Shouldnt change. So we're still expecting kind of flattish gross margin for the year. So all of the incremental EBITDA margin cut.
Catherine Spear: Okay, that's helpful, thanks, Karina. And then, just in terms of the change to the margin guidance, I just wanted to make sure that we're all super clear. It sounded like you said gross margin for the full year shouldn't change, so we're still expecting kind of a flat-ish gross margin for the year. So all of the incremental EBITDA margin cut is essentially coming from the marketing line? That's correct. So gross margin.
Catherine Spear: Essentially coming from the marketing line.
Catherine Spear: That's correct. Gross margin is relatively flat year over year. And the EBITDA update is really around us investing and doubling down on what's working and doubling down on engaging our community in awesome ways. We have $259 million in cash. We have no debt. This is a highly cash flow generative business, and we're investing in ourselves.
Karina: That's correct, so gross margin relatively flat year over year and.
Catherine Spear: The EBITDA update is really around us investing and doubling down on what's working and.
Catherine Spear: And doubling down on engaging our community and often ways, we have $259 million of cash we have no debt is a highly cash flow generative business and we're investing in ourselves.
Catherine Spear: Okay.
Speaker Change: Okay. Thank you I'll leave it there.
Matthew Butler Koranda: Thank you, Matt. Our next question comes from Dana Telsey with the company, Telsey Group. Dana, your line is now open. Hi, good afternoon.
Catherine Spear: Thank you Matt next question comes from Dana Telsey with accompanying Telsey group Dana Your line is now open.
Dana Lauren Telsey: Hi, good afternoon everyone. Trina, as you think about the product mix shift that is ongoing, what are you going to, what are you going from, how is the pricing on new products changing or adapting, and now we're in the middle of Nurses Week, what are you seeing this year that's different than last year? Is there a pickup in momentum? Is it a product category that you're seeing with that momentum improving? Thank you.
Dana Lauren Telsey: Hi, good afternoon, everyone.
Dana Lauren Telsey: China as you think about the product mix shift that is ongoing what are you going to what are you going from how is the pricing on new product changing or adapting and now we're in the middle of nurses week. What are you seeing this year that's different than last year is there a pickup of momentum is that a product category that you see.
Dana Lauren Telsey: With that with that momentum improving thank you.
Trina: Thanks Dana.
Catherine Spear: Dana, great to speak with you again. So I think we set out to diversify the business from a product standpoint. Diversify by category, our outerwear, our underwear, our compression socks. What are care professionals wearing to work, at work, from work, on shift, off shift, head to toe?
Dana Lauren Telsey: To speak with you again, so I think.
Catherine Spear: We set out to diversify the business from a product standpoint diversified by category.
Catherine Spear: Our outerwear are under scribes or compression Sox water care professionals wear to work at work from work on shifts offset Ted to tell we're not just the Scripps company anymore and you see it in the numbers over 20% of this business is everything else I described and even within describes we've made huge strides from an innovation.
Catherine Spear: We're not just a scrubs company anymore. And you see it in the numbers. Over 20% of this business is everything outside of scrubs. And even within scrubs, we've made huge strides from an innovation standpoint. Like I mentioned, doubling as a contribution to the business, our limited edition scrub wear. And so, you know, a lot of that does come with higher AUR.
Catherine Spear: <unk> standpoint, like I mentioned doubling.
Catherine Spear: As a as a contribution to the business our limited edition scrubbed wear and so.
Catherine Spear: And a lot of that does come with higher AUR. So that's great to see new innovation drives.
Catherine Spear: So that's great to see. New innovation drives UPT as well, which gives leverage, as you know, across freight, fulfillment, and marketing. And while product margins at the beginning are a bit lower on paper, order economics really do offset that.
Catherine Spear: UPC as well, which gives leverage as you know across freight fulfillment and marketing and while product margin at the beginning are a bit lower on paper the order economics.
Catherine Spear: Do you offset that.
Catherine Spear: And so, you know, I think we're projecting for the year an AOVA gain from AUR and UPT, as I just discussed. And in terms of Nurses Week, I think we're off to a really strong start. It's really exciting to see the engagement. We actually kicked off Nurses Week at the New York Stock Exchange with our nurses on the podium, and we got the whole world behind them to see the work that they're doing and celebrate them and just, you know, put them on a pedestal, which is literally what we did. And I'm so excited that we had that moment and, you know, how do we continue to engage with them? It's gonna be an exciting year.
Catherine Spear: And so I.
Catherine Spear: Where we're projecting for the year and it will be a gain from AUR and <unk> like I just discussed.
Catherine Spear: In terms of nurses week, I think we were off to a really strong start.
Catherine Spear: It's really exciting to see the engagement, we actually kicked off nurse's week at the New York stock exchange with our nurses on the podium.
Catherine Spear: Back to what we're all about celebrating this community and often ways and memorable ways in getting the whole world behind them to see the work that they're doing and celebrate them.
Catherine Spear: And just you know.
Catherine Spear: Put them on a pedestal, which is literally what we did and I'm. So excited that we had that moment and how.
Catherine Spear: How do we continue to engage with them, it's going to be an exciting year.
Catherine Spear: But any learnings from the retail store and when does Philadelphia open.
Dana Lauren Telsey: Any learnings from the retail store, and when does Philadelphia open?
Catherine Spear: Hello, the retail store. So the store has been great. 40% of our community that is purchasing within the store are new customers. And this is in our most penetrated market, Los Angeles. So that's great to see. Healthcare professionals are like everybody else, right?
Dana Lauren Telsey: How are the retail Saar.
Dana Lauren Telsey: <unk> has been great.
Catherine Spear: 40% of our community that is purchasing within the store or new customers and this is in our most penetrated market of Los Angeles, and it's great to see.
Catherine Spear: Healthcare professionals are like everybody else right they want to engage with brands, both online and off and we're seeing that in our century City store daily is coming in late summer, which we're super excited about.
Catherine Spear: They want to engage with brands, both online and off. And we're seeing that in our Century City store. Philly is coming in late summer, which we're super excited about, on Walnut Street. And it's a great space. It's a larger format than Century City, and we're really excited about the community space on the second floor, where we're going to be able to engage with speaking events and different activations. It's going to be so awesome. So I'll send you that invite, Dana, because you've got to come.
Catherine Spear: On Walnut Street.
Catherine Spear: And it's a great space, it's a larger format than century city and we're really excited about the community space on the second floor, where we're going to be able to engage with speaking events in different activations, it's gonna be sell off them. So.
Catherine Spear: I'll tell you that in by data because you got to come.
Catherine Spear: Okay.
Dana Lauren Telsey: Okay. Thank you very much. It's nice to see the progress. Thank you, Dana. Our next question comes from Bob Drbul with the company Guggenheim. Bob, your line is now open. Hi, uh, good after-
Speaker Change: Thank you very much and nice to see the progress.
Robert Scott Drbul: Thank you.
Robert Scott Drbul: Thank you, Dana. Our next question comes from Bob Thurble with the company Guggenheim. Bob, your line is now open. Hi, good afternoon, everyone.
Robert Scott Drbul: Thank you Dana our next question comes from Bob <unk> with the company Guggenheim Bob Your line is now open.
Robert Scott Drbul: Hi, good afternoon, everyone.
Speaker Change: I guess.
Robert Scott Drbul: I was just wondering if you could talk more about sort of the customer a little bit you.
Robert Scott Drbul: You mentioned the pressures on the health care professionals last quarter, and I think that impacted demand is changing now.
Robert Scott Drbul: If it hasnt changed and what do you really think is spurring some of the demand and I guess the other piece of this is do you think the replenishment cycle is bottoming.
Catherine Spear: Thanks, Bob. So we're seeing signs, like I said, that repeat rates have bottomed and are now rising and heading in a positive direction. This is something we've talked about for a while, and so it's really exciting to see that. It's still early days, but these leading indicators make us very hopeful about the health of our consumers, and about the health of the healthcare professionals. It's starting to turn a corner. And more generally, we've spoken about some of the systemic issues with healthcare professionals. They will remain focused on fixing the structural issues in healthcare, and that's why we fight so hard for advocacy for our community with our Awesome Humans bill. So that's really something that we are going to continue to fight for.
Robert Scott Drbul: Thanks, Bob.
Robert Scott Drbul: So we're seeing signs like I said that repeat rates have bottomed and are now rising and heading in a positive direction. This is something we've talked about for a while and so it's really exciting to see that it's still early days, but these leading indicators that make us very hopeful about the health of our consumer about the health of the health care professionals that is fair.
Catherine Spear: To turn a corner and then more generally.
Catherine Spear: Spoken about some of the systemic issues with health care professionals will remain focused on fixing the structural issues in health care and it's why we fight so hard on advocacy for our community with our OSM humans Bell.
Catherine Spear: So that's really.
Catherine Spear: It's something that we are going to continue to fight for it in terms of the replacement cycle, we're nowhere near that normalization of repeat dynamics in this industry you.
Catherine Spear: In terms of the replacement cycle, we're nowhere near the normalization of repeat dynamics in this industry. You saw that repeat frequency, that replacement cycle, if you will. It was definitely normalized pre-COVID, pre-pandemic. It spiked during COVID, and we're still in a bit of a lull, but it's great to see that that's bottomed.
Catherine Spear: You saw that.
Catherine Spear: That repeat frequency that that replacement cycle, if you will.
Catherine Spear: It was definitely normalized pre COVID-19 pre pandemic.
Catherine Spear: It spiked during Covid and we're still in a bit of a lull, but it's great to see that that has bottomed.
Speaker Change: Thank you.
Speaker Change: Thanks, Bob.
Speaker Change: Thank you Bob.
Brooke Siler Roach: Our next question comes from Brooke Roach with the company Goldman Sachs. Brooke, your line is now open.
Catherine Spear: Our next question comes from Roche with the company Goldman Sachs Brooks. Your line is now open.
Catherine Spear: Good afternoon, and thank you for taking our question. Trina, you spoke of the green shoots that you've been seeing in the non-scrub category, as well as new limited edition products. Can you elaborate on the growth rates and frequency trends that you're seeing within your core US scrubs business? And is the core scrub customer engaging more at full price, or has more of this green shoot growth been driven by key promotional moments?
Brooke Siler Roach: Good afternoon, and thank you for taking our question Trina you've spoken to the green shoots that you've been seeing in the non truck category as well as new limited edition product can you elaborate on the growth rates in frequency trends that you're seeing within your core U S scribes business.
Catherine Spear: And is this is the core scrubbed customer engaging more at full price or has more of this green shoot growth been driven by key promotional events.
Catherine Spear: So, I think what we've seen is with the innovation is that it's not only driving, you know, sell-through in those styles and in those categories, it's also driving the core, and two things that we say here at Figs is pinnacle drives core and repeat drives new, and so that dynamic of launching new products, new innovation that has really been exciting year-to-date is driving not only engagement in those styles and engagement in those categories, but also engagement in the core, and so that's great to see, and we've, and core is kind of a lagging indicator to, you know, the sell-throughs across the pinnacle or across limited edition. In terms of, sorry, Brooke, what was your second piece of that question?
Trina: So I think what we've seen is with the innovation is that it's not only driving.
Catherine Spear: Sell through in those styles and in those categories. It's also driving the corn.
Catherine Spear: Two things that we say here at fixes Pinnacle drive car and repeat drive now and so that dynamic of launching new products, new innovation that has really been exciting.
Catherine Spear: Year to date.
Catherine Spear: Is driving not only engagement in those styles and engagement of those categories, but also engagement in the core and so that's great.
Speaker Change: And core is kind of a lagging indicator or a lagging indicator too.
Brooke: The sell throughs across the Pinnacle or cross limited edition.
Catherine Spear: In terms of sorry, Brooklyn was your second piece of that question.
Catherine Spear: Just whether or not that consumer is engaging more at full price or if more of these green shoots have been driven by promotional moments.
Brooke: Just whether or not that consumer is engaging more at full price or if more of these green shoots have been driven by promotional moments.
Catherine Spear: Oh, we haven't seen much shift year over year from the engagement across full price versus promotional moments. So we continue to be incredibly disciplined. And you see it in the gross margin, incredibly disciplined around our promotional cadence, incredibly disciplined around that level of promotion. And so it's exciting to see that the engagement level isn't just coming, you know, during those moments.
Brooke: Oh, we haven't seen much shift year over year from the engagement across full price versus promotional moment. So we continue to be incredibly disciplined and you see it in the gross margin incredibly disciplined around our promotional cadence incredibly disciplined around that our level of promotion and so.
Catherine Spear: <unk>.
Catherine Spear: <unk>.
Catherine Spear: We.
Catherine Spear: It's exciting to see that engagement level.
Catherine Spear: Is it just coming during those moment.
Catherine Spear: And then, just finally, for me, can you help us break down the growth expectation that you have between your international and your U.S. business for both QQ and the full year, given the updated guidance forecast?
Speaker Change: Great and then just finally for me can you help us break down the growth expectation that you have between your international and your U S business for both <unk> and the full year given the updated guidance forecast.
Speaker Change: Look I would love to give it to you, but everyone is telling me I can't so.
Catherine Spear: I would love to give it to you, but everyone's telling me I can't, so, you know, we don't break that out, but international business continues to grow phenomenally well, and I would just take out the duty reclass when you look at that international growth to give you the full picture of that, but we're really excited about not only what we're seeing internationally. From a U.S. standpoint, a lot of what we're seeing in terms of repeat frequency is engagement around our storytelling, engagement around big brand moments, and so that's why we're continuing to invest, and it really is in that U.S. customer.
Catherine Spear: [laughter] so.
Catherine Spear: Don't break that out but international continues to grow phenomenally, well and I would just take out the duty re class. When you look at that that international growth to give you the full picture of that but we're really excited about not only what we're seeing internationally from a U S standpoint, a lot of what we're seeing in terms of repeat frequency is that engagement around our storytelling.
Catherine Spear: And you've been around big brand moments and so that's why we're continuing to invest it really isn't that U S customer.
Brooke Siler Roach: Great, thanks so much. Pass it on.
Speaker Change: Great. Thanks, so much I'll pass it on.
Brooke Siler Roach: Okay.
Speaker Change: Thank you Brook.
John David Kernan: Our next question comes from John Kernan with the company T.D. Cohen. Dan, your line is now open.
Brooke Siler Roach: Our next question comes from John Kernan with company TD Colin Dunn. Your line is now open.
John David Kernan: Good afternoon, thanks for taking the question. Trina, you talked a lot about Tam factoring the IPO process. I was wondering how your view of addressable markets evolved and how your share is progressing as we get through 2024.
John David Kernan: Good afternoon, thanks for taking the question.
John David Kernan: You talked a lot about Tam.
John David Kernan: Factoring the IPO process.
John David Kernan: Wondering how you view.
John David Kernan: Small markets evolve.
Dan: And how you're.
Dan: Sure is progressing as we get through 2000.
John David Kernan: 24.
Catherine Spear: John, I knew the TAM question would come from you, but I'm glad to see it. So, we feel really good about our ability to continue to penetrate the, you know, healthcare apparel market. It's an $80 billion market globally. It's $12 billion in the United States. And, you know, we're doing over half a billion in sales. There's a lot of running way ahead of us.
Trina: John I knew the Tam question would come from you, but I'm glad to see it. So we feel really good about our ability to continue to penetrate.
Catherine Spear: The health care apparel market.
Catherine Spear: It's $80 billion market globally, it's $12 billion in the United States and.
Catherine Spear: Yeah, we're doing over half a billion in sales Theres a lot of run way ahead of us and you see that.
Catherine Spear: And you see that in the international growth. And you see that in the team's growth, which we haven't talked about yet. But, it's really exciting to see that business continue to scale. So, and then I do think, and we've talked about this, we're creating TAM. You know, non-scrubs is essentially mostly TAM creation. And so, having that be over 20% of our business is a great sign that, you know, yes, there is the scrubs market.
Catherine Spear: In the international growth and you see that actually in the teens growth, which we haven't talked about yet, but it's really exciting to see that business continue to scale. So.
Catherine Spear: And then I do think and we've talked about this we are creating can non scrubber is essentially mostly tam creation, and so having that be over 20% of our business.
Catherine Spear: Great sign that yes, there's describes market, but we are innovating every day and I would say a large portion of what we're doing even within scrubbed does not in that Tam. So.
Catherine Spear: But, we are innovating every day. And, I would say a large portion of what we're doing, even within scrubs, is not in that TAM. So, we very rarely speak about TAM here because innovation changes TAM, and that's what we're looking to do.
Catherine Spear: We very rarely speak about Tam here because innovation.
Catherine Spear: Changes hands and that's what we're looking to do.
Kevin Fossey: Kevin, I think you said the fulfillment investments this year are 220 basis points. Edwin, how do you recover that margin over time? What type of top line growth does it need? And what are the returns that you expect to generate off this investment? Thanks. So John, all of that investment is transitory.
Speaker Change: Understood. Thanks, Kevin I think you said.
Kevin Fossey: The fulfillment investments this year are 220 basis points.
Kevin Fossey: Headwind, how you recover that margin over time, what type of topline growth that's it that's it.
Kevin Fossey: Need and where the returns.
Kevin Fossey: We expect to generate office conversion.
Kevin Fossey: Yeah.
Kevin Fossey: So John, all of that investment is transitory. So those 220 basis points are all the transitory costs of having two facilities open at the same time as we move to our new facility. So that will all go away next year.
Kevin Fossey: So John all of that investment is transitory. So those 220 basis points is all the transitory costs of having two facilities open at the same time as we move to our new facility. So that will all go away next year.
Speaker Change: Got it.
Speaker Change: Alright, thank you.
Kevin Fossey: Yeah.
Speaker Change: Thank you John.
Angus Keller: Our next question comes from Angus Keller with the company Barclays. Angus, your line is now open.
Kevin Fossey: Our next question comes from Angus Keller with the company Barclays. Your line is now open.
Angus Keller: Hi Adrienne, this is Angus Anfor from e-tailer Angus Anfor. Thanks for taking my question. What are some of the long-term opportunities on the selling expense line as a result of the fulfillment center shift and change in fulfillment partner? And at what point do you start leveraging those? Is it a function of time, or do you need a certain amount of international revenue to get there?
Angus Keller: Hi, This is Andrew on for <unk>. Thanks for taking my question.
Angus Keller: What are some of the long term opportunities on the selling expense line as a result of the fulfillment center shift and change and fulfillment partner.
Angus Keller: And at what point do you start leveraging those.
Angus Keller: Is it a function of time or do you need a certain amount of international revenue to get there.
Angus Keller: So we feel really good about our.
Angus Keller: Moving to our new facility.
Angus Keller: There is a number of things that this is going to help us do to create a better experience for our customers higher reliability.
Angus Keller: And really set us up.
Angus Keller: From a from to your point too as we scale, we're going to gain leverage from this new facility.
Angus Keller: It's really tech enable there's a ton of robotics and so you know as we move beyond ourselves today, we're set up to drive meaningful a much bigger business in this facility from an international perspective, we've talked about our Q1.
Angus Keller: Timing as it relates to opening up our Canadian facility and so not only is this facility in and of itself something that we're going to gain leverage from over time. It's also setting us up to build a global network of distribution and so this is an.
Angus Keller: Exciting.
Angus Keller: Citing start as we.
Angus Keller: Really look too.
Catherine Spear: make it very easy to get your package. You shouldn't have to wait more than two to three days, right?
Angus Keller: Make it very easy to get your package you shouldn't have to wait more than two to three days right and so how do we do that on a global level. This is setting us up to really ensure that it's fast it's convenient it's reliable and you get what you need to go to your job and do it well.
Catherine Spear: And so how do we do that on a global level? This is setting us up to really ensure that it's fast, it's convenient, it's reliable, and you get what you need to go to your job and do it well.
Speaker Change: Great. Thank you.
Angus Keller: Great, thank you. And I guess just secondly, curious if you could talk about the performance spread between the rest of the world and the US in one question, given that the rest of the world's growth was outpacing the US pretty meaningfully. So I guess what's working in those international markets that maybe isn't responding as well in the US? Sure, I mean, so it's really different strategies, right?
Speaker Change: And I guess just secondly.
Angus Keller: I'm curious if you could talk about the and this is kind of a follow up on Brooks question curious if you could talk about the performance spread between rest of world and U S and <unk> given the rest of the world growth was outpacing the U S pretty meaningfully so I guess, what's working in those international markets that maybe isn't resonating as well in the U S.
Speaker Change: Thank you.
Catherine Spear: Sure, I mean, so it's really different strategies, right? The rest of the world is really leaning into bringing on new healthcare professionals. There are 140 million healthcare professionals around the world. And many of them, you know, were similar to the US in that they had these baggy, boxy, ill-fitting scrubs, and it was just awful.
Angus Keller: Sure I mean, so it's really different strategies right. The rest of the world, we're really leaning into bringing on new health care professionals. There are 140 million health care professionals around the world and many of them. You know it was similar to the U S and that they had these baggy boxy ill fitting scribes and it was.
Catherine Spear: Thoughtful until really first off getting them to know whats exist entering these markets and localizing localizing from a translation speaking their language from a currency standpoint from our site experience standpoint from merchandising the product that makes the most sense for them based on where they live really understanding there.
Catherine Spear: And so really, first off, getting them to know what Figs is, entering these markets and localizing, localizing from a translation standpoint, speaking their language from a currency standpoint, from a site experience standpoint, from merchandising the product that makes the most sense for them based on where they live, really understanding their holidays and how they want to engage with Figs. And so that's been a huge highlight from an international perspective and something that we're even still in the early days on. I mean, there's a number of countries that we haven't even fully translated into their language.
Catherine Spear: Holidays, and how they want to engage with banks and so that's been a huge highlight from an international perspective and something that we.
Catherine Spear: We're even still early days on I mean, there's a number of countries that we haven't even fully translated into their language. So it's a lot of opportunity from a U S perspective.
Catherine Spear: There is a lot of opportunity. From a US perspective, you know, we are really encouraged by what we've seen with our product launches, driving people back, with our campaigns and our storytelling, engaging this community in deeper ways. And there's a whole part of this country that doesn't, just like international, doesn't yet know about Figs. And so how are we bringing new healthcare professionals into the Figs family is a huge focus for us. But we believe that the brand, you know, the big tentpole brand moment is really how we're going to get that awareness, both in the US and globally, coupled with localizing internationally. That's our strategy.
Catherine Spear: We really are encouraged by what we've seen with our product launches driving people back with our campaigns and our our storytelling engaging this community and deeper ways.
Catherine Spear: And there's a whole part of this country that doesn't just like international doesn't yet know about fixed and so how are we bringing new health care professionals into the VIX family is a huge focus for us.
Catherine Spear: We believe that the brand Big Tentpole brand moment, that's really how we're going to get that awareness both in the U S and globally, coupled with localizing internationally on that that's our strategy.
Speaker Change: Thank you.
Speaker Change: Thank you Angus.
Catherine Spear: There are no additional questions waiting at this time. I would like to pass the conference over to Trina Spear for closing remarks.
Catherine Spear: There are no additional questions waiting at this time I would like to pass the conference over to Steve for closing remarks.
Catherine Spear: Thank you for joining us. This is a great, great speaking with you all, and I look forward to speaking with you next quarter.
Catherine Spear: Thank you for joining us this is a.
Catherine Spear: Great Great speaking with you all and look forward to speaking you next quarter.
Catherine Spear: Okay.
Catherine Spear: Yeah.
Operator: That concludes the FIGS first quarter fiscal 2024 earnings conference call. Thank you for your participation, and enjoy the rest of your day.
Catherine Spear: That concludes the <unk> first quarter fiscal 2020 earnings conference call. Thank you for your participation and enjoy the rest of your day.