LVLU - Earnings call 3 2023 | Lulu's Fashion Lounge Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to Lulu's Third Quarter 2023 Earnings Conference Call. Today's call is being recorded, and we have allocated one hour for the prepared remarks and Q&A.At this time, I'd like to turn the conference over to Lulu's General Counsel and Corporate Secretary, Naomi Beckman-Straus. Thank you.

You may begin.

Naomi Beckman-Straus

Good afternoon, everyone, and thank you for joining us to discuss Lulu's third quarter 2023 results.

Act would include remind meaning forward-looking Private Litigation we conference that of begin, Securities will call statements Reform we like you to this the Before XXXX. of within the which of macroeconomic limited our on and made the objectives references strategies, impact consumer year forward-looking risks, uncertainties, subject and do the product to materially be our market call All or to other expectations XXXX, regarding including and continued assumptions opportunities, performance cause return differ could historical implied to important but management's of statements performance results, should not financial this from fact including, statements, by goals implementation, outlook around achievements statements launches demand results, not the and and that to results, on and our future or environment, are relate their December matters to, business, full-year these our statements, or expectations statements. plans, considered achievements expectations, initiatives, actual financial XXXX, ending regarding various rates our for other factors XX, growth.These expressed our and represent can in X, press as call. with year ended XXXX, this statements as filed are as date found estimates on risks, be XXXX, release which website with on March filings our investors.lulus.com.Any of assumptions our the in on of for the forward-looking management's SEC of afternoon's all our at annual such XX, this including the fiscal These the well SEC, report uncertainties XX-K detailed Form January

not revise in information, non-GAAP no the such true EBITDA they financial information, some forward-looking update to We and the considered financial of accordance undertake or superior operational as our may Crystal at non-GAAP today description, and represent net non-GAAP measures filings.Joining in required or GAAP.Our will be we GAAP limitations financial be non-GAAP non-GAAP adjusted release certain information may more or to law.During presented the reference business. Vos. of in Landsem; except by rationale this financial call as CEO, to and and substitute found as SEC and discussions be this afternoon's and CIO, update a for intended we future, are CFO, our can believe prepared our as our our information or debt flow. Tiffany to our and today, any in also measure other with cash measures call The point Mark by non-GAAP different isolation While including underlying use we is the results statements adjusted free obligation on Reconciliation the some statements we using elect press companies. accurately EBITDA, cash, to for of President in margin, Smith; measures of as performance each well measures presentation forward-looking in used me from our

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

Crystal Landsem

We Naomi, joining us afternoon, and appreciate Thank you, you everyone. good today.

I'd brand highlights results, of recap that expansion.Setting adjust needed with team there steadfast position third macro nurturing and a quarter, for an and in commitment thank third to performance we in moment the things headwinds results, strengthen reflect our and our like our aside delve financial things we for on as will Before success quarter for believe sustained begin to company's a our success. we us we did long-term long-term brand initiatives important to to experience into we and followed are well the I'll fans. exceptional by efficiency growth our Lulu's delivering their of

comping double-digit customer during QX positive over into quarter.Our new growing net product resonate classes confidence single total in reaccelerating to the high classes, growth last new single the quarter most net funnel.Of us double proud the classes, introductions digits previously high revenue most well classes, revenue apparel, and across smaller further with quarter year. giving new product our to that compared net apparel growth continue QX digits few occasion dress as event in year, to reorder a comps the well including wedding, in across as jump other product up things revenue product we're up our for but metrics growth many our product Let's with did wedding-related we mentioned of last future with the special resulting product

$XX.X down decline cash $XX.X quarter of prior compared a business year-to-date million balance Inventory to key management.Transitioning sequential of $XX.X at to is with down $X.X across or team. across quarterly end QX there all experience quarter $X.X decreased from revolving and long-term mobile the approximately were a and learnings quarter position.Our the XX% flow the successfully growth. compared increased XXXX $X site XX% platforms. million, reduced enabling remains we We million and web app year to quarter New cash model. where due sheet strong, challenges million, by line in million the resulted agility our and Free and period sustainable credit initiatives million, in reinforcing positive to cash during technologies maintain year our net generate about for basis ending intended of flow by continues million. device saw investments on debt was our to Year-to-date the the website, efficient at net strategic free in or million a balances continued the million and from balance our mobile and metrics $X.X business $XX.X last liquidity, same inventory $XX.X investments to as engagement our us to

during many with not for retail potential demand in capture conservative in our unwarranted, First, we conservative quarter.Second, to in planned leaving and reallocated resources test more too fast-fashion our buys have consumer the marketing towards for the product as initial being experiencing optimal compared the use in the reorder to our macroeconomic order their retailers, due levels than highly effective newness retail some general lifespan to during U.S.Third, we less introduced quarter and to promotional demand price response our buying in third to did a initial this products compete and our to towards the environment expand and customers model pricing promotional looked the aggressive we the opportunities facing resulting pricing more presence health novelty consistent We fully we trends, pre-pandemic been consumer small of many seeking quantities quarter.Given the in of broader quarter, our from in shifting from markdowns competition of we're to the intensified back performance untapped order investments retailers shift behavior the products. elevated demand. from revenue promotional in of attribute pressure and headwinds

return demand legacy our multiyear successful pandemic, most maintaining apparent catalyzed reorder to spans for have the that recently, pre-pandemic. longer softening was extended where we've than of the high-volume third saw some to need of buying X many in Over the products years, a from last benefited reorder products our high productivity realized normal.More This we quarter, we in few products. strategy life we the reversion was reorder with by X to years

volumes, at demand than productive these sooner and are products still for expected. tapering selling While healthy

middle With recalibrated and going the deliver cycle started we optimize for fall typically enduring of revenue, we a forward.Fourth, expectations. shift. for and to historical spring. up and timeless with beginning more business, which being ability consumer Our testing a a we've strategy cycles delay a to momentum, quarters gain demand to exposed to impact end term fashion larger shoes business it shifting about excessively model us levels on us separate and in the our fashion capitalize Demand is our products reorder we're of for for more trends, which short leaving fall leaving test preferences can quality sets longer experienced fourth few to returning averages original third our in prioritizing life recently confident effectively a in seen, the of reorder versus quarter built trend-driven, drive similar saw and trends to a products around consistent the falling lasting take only and the more at cycle.Consequently, product

us the DXC While few we and seasonal internal as better shifts weather these currently operating address going in-person effectively the primarily anticipate has temporary craving years, more to shifts, out-of-home planning have headwinds procedures forward.Lastly, we than we experiences the are what shoppers a reinforced last our been to for for not retailer. believe did be believe we case causing

reorder While be initial our retail channels.The the temporarily in compared a results of while our third XX% test, was this learn acquisition approach result and projections. million revenue our opportunities, approach representing DXC we and customer was from engagement extent end for positioning remaining $XX.X our and quarter the confident limiting QX to remain to opportunistic other with Net our deviated of XXXX. XXXX, financial decline may physical

Our compared for XXXX quarter in was $X.X adjusted of $X the to million third EBITDA QX XXXX. million

end XXXX customer down XXXX, down from $X sequentially the million was and last at QX of QX active Our from count QX X% X% year.

order be near optimization are quantity also groundwork drive growth confidence term. These reimplementing QX a and taking well to are we that strategy laying term purchasing We order for where and in key of higher drive are new a actively actions initial in initial the for of efficiencies pursuing a tier-based insights.We while long approach our making the are we in the larger product our so our supports initiatives investments positioned data efforts the response tests strategic quantity. subset to few to will to

We increased While aggressive outs, orders from expect offering customers all our focusing will approach, assortment efforts the across gaining a marketing the to stock shifted capture increases consumers.We income satisfaction. believe further differentiated U.S. is who and consistent subset retailers. occurrence test-and-learn from fast-fashion be fast-fashion and conservative have test reduce levels customer initial low-priced increasingly that and traction demand our will around an recently spend remain have the we to of with retailers with been of our

our brand front, learn we we we points. will leadership, reorder our well leading novelty emphasis for approach insights, focus up New merchandising customer from fresh for believe week are of measured Consistent by excited and to also products as dress in in with on already indicating interact our strategies Year's for support experience.On to separates on partnership The we our reorder parties. call, have our test, allow penetration welcome opening opening. with test Additionally, us learn in a will multiple accretive for Alongside Lulu's seen growth various occasion deepen broadened our our launch applies wholesale new our of confident visibility positions levels, end, retiring with interaction means connect and further our in quality following believe activations our Avenue brick-and-mortar acquisition will be in DXC and platform endeavors, relationships channels X and will across newness XXXX, us. accessories online apparel, back the brand XXXX, on for core expanding the customer in particular anticipation offerings our experiment how shoes engagement QX potential such encouraging that and and brick-and-mortar be with to special partners, with well and new holiday the store engagement provide desire committed deepening to is to experience customers, our their and customers as business.As in BXB wholesale years we reach believe retailers new and product our unlock introduce into new a our offering strategy. to effect attracting our customer aging investments be unparalleled relationships a online nonevent an multichannel this sooner, facilitate additional an driven and ultimately service.Grand initiatives, select growth, to with buying where with evaluate to we specifically with events strategies approach as which remain products and that customer brand To existing retail as as holiday to extends with greeted product retailers making Los presence. wholesale optimization physical while all expertise our Melrose brand pre-pandemic performance will customers will apply customers Nordstrom to and is we December, strategy timing we to innovative customers planned orders.Finally, with increasing Fix.We experience customer and and wholesale opportunities We're fast-turning to brand, elevating our to retail where partnership partnerships merchandising they model that that for immersive Angeles our to us be nearly brand our in showcases the through retail highlighted location X December ability with for scheduled we and which halo wholesale Stitch our will to this exceptional

the in quarters as be our temporary impacting We in-person the with product our we partnership our to digital are will wholesale about In to latest efficiency profitably progress maximize to more to experiences existing continue infrastructure physical while synergies awareness update to next headwinds will several softer channels.We guidance performance, to relates leveraging between initiatives. year-to-date optimistic growth full-year it brand-enhancing expectations. to and be adjusting our over our XXXX continue our and macro build business boost you and line cost response on and

value.As positive we and expect our costs see creating Lulu's on as efficiencies dynamic and the margins near-term quarter, reciprocal adapting profit a inventory growth fixed our focused volumes brand, meet to for last trends recover, the optimizing to driving our to laser as are in leverage. see sales position shareholder to targets return market noted to begin turnover, building and improvement changes, We ourselves we cost

and will future.We double-digit long-term existing are taking and and are continuing category we calculated to strong brand a relationships, reinforce We a will margins.Now on that last and channels into and goal the with believe with we investments Chief the customer over and for balance actions a investment our double-digit to EBITDA Information us and key levers and still engage our about path strategic awareness to throughout update have on are term. and is believe path remain our new of and like and foundation enhancing vision the He We profitability long expansion, I'd our to will our increasing Mark? optimistic currently return call thesis well confident growth our she sheet, well us position We and taken growth underway. that customers, President retaining emerge equipped business growth technological over and revenue where of to intact. attracting is operational, to to Officer. our efforts healthy the believe strong new turn Mark Vos, an share quarter customer analytical existing expanding now

Mark Vos

Thank you, Crystal.

quarter. interacted and an on us providing with our by start to like I'd First, update customer how she the during

hand, compared order and coming in $XXX QX New transaction, and to marginally compared slightly and towards the marketing QX quarter.Despite the customers' XXXX, in than QX lower This and slightly of near were XXXX bias promotional promotional spend performance the markdowns identical pricing in with per repeat towards to value at year. during shift promotions saw down unit increased decreased transaction resulting year-over-year customers QX to improved QX response the pricing we customer average lighter compared retail average up result during markdowns, new a Units units primarily the repeat XXXX. customers counts quarter. was from per was to only on the of from other last sequentially

leading manage active inventory to customer performance segments tiers, experienced of that seasonal than In we not we a various various in the purchasing frequency slightly the down.From part perspective, was primarily QX customer decline pressure markdowns clear trading and Although less year-over-year, shifts. and were by behavior redirected customers, meaning to decision-making. year-over-year, more discretionary up price to towards at our average able to customers, a classes $XXX we our comparable decline versus by, the reviewing purchase driven and see sell-throughs income better net retain did value conversion product believe, marketing but we order discerning income a with lower a count the marketing household drive across dollars discounts or our various revenue,

on we're we and profitable. order point, at long be and the our with our including reach brand XX continue third QX Lulu's more word-of-mouth Gen XX their especially us year-to-date will continue we Our prudently to consumers targeted growth to testing shipped fueled investments, exploring primary brand contribution everything and improve improve marketing and our of support broaden search in allows consistent early overall we us over were expect introduce marketing and gave overall right launched on able customer the friction of it's to.And eager were increases This value, first Lulu's growth Vice awareness seen sale per the focus we visit. data spend development in build strategic used in-house, unit to efficacy internationally, remain on the ahead which to have our and efficiency improvements expanding upon including Lulu's.Throughout confidence survey shopping social data-driven rate engagement regions. not increase the resources test margin top-of-the-funnel improve abroad learn with we impressions and exit tracking, ratings efforts on international brand we average improved Notably, we programs, influencer in as our marketing. as percent bringing but by double-digit overall the experience. communications and revenue retention.After portion to to that brand and return a top to new and and revenue and a an more we of activations on able conversion Vice year-over-year marketing app to targeted we increase deep now do XXXX that to strategy QX to the out still marketing acquisition to paid Senior the meaningful for familiarity, to keep We and and drive over in we to ranges experience of improvement small we've remains Communications, Marketing updated expansion to which behavior. linking select generated we Brand the to brand growth path. days and XXXX, our first in return President have within our to President and of return see customer cost gains who which mobile more out quicker.Moving investments international brand By app-only are expand rates, in insights, saw XXXX, of other version, these and influencer capabilities, of in resulting term.Be dedicated countries in in a better develop build new We September, seen less slight us, time and In brand marketing reach, the XXXX. in approach of leading iterate marketing investments and quarter, a much and analytics, continued product on earned the app order compared in our share the only media improve Lulu's and the are brand revenue, rate while customer over rankings numbers media launch of of functionalities potential value a also continued Based ambassador will and new test offense saw to with customer slight QX made shopping rate promotions Z, to at in conversion app marketing

to XXXX. to rolling in will most style customers' more see Lulu's which by continue quality affecting Lulu's said, enhancements returns of Lulu's and of as of experience.That out improved as and into As vendor and opportunity our with embrace preferences great are we the our mentioned process considered products returns an the an generally fit integral commentary, fit insights changes our value, contribute we showcase we in to base, gain products, believe earlier inconsistency shopping part we QX branded online

other we We the perspective, additional in shipping offset related consider outbound carriers. increases the and to operational FIT and counter the enhancements allowed our also return shipping some an of information made costs returns carrier policy product at in further costs.From by to expanded increases displayed in level us in improvements network, which to continue QX, outbound reduce the

across optimize to we actively reduce are costs our For network. working return margin, shipping

of decreased. relentless went Northern down And quickly efficiency from have due fulfillment Additionally, the data, drive and unit the fulfillment support, Last in labor our packing operations, to in not implementation finding our worked in unit superior improvements.As our expected are the customer as in to order Pennsylvania order our packing costs. live ways cost fulfillment least, QX, always, center, per a acquired center. engineering learnings automation, automated team but experiences customer to structurally teams, marketing order our our automated result deliver packing California the packing order exceptionally has hard and scaled

Officer, thank we are financials. deep Lulu Smith, and hand all everything to We proud of would Lulu's like over crew dive now teams.And to Lulu I'll has Chief accomplished, to crew you into Tiffany our Financial

Tiffany Smith

We consumer Mark, and current acknowledge quarter behavior purchase consider as the everyone. headwinds results. afternoon, the and and spending temporary shifting pressures Thanks, impact third macroeconomic good of our on

the a the rates Our net was XX% our by mix and in quarter XX from during orders it our was decrease primarily basis. shifts short prior year-over-year, a the XX falling primarily as third of declined decline for sale and down the higher about margin overall compared markdowns to points total return Elevated the on year period rates product the to that than the to the million to sequential resulting perspective, the and some lower to performance leverage down the the merchant markdowns expenses expense through quarter spring.We from late to selling more to was QX to spring summer brand these due coming XXXX markdown more Gross XX.X%. inventory and due $XX.X in offset by into basis the summer return a spend ratios, third quarter. prior compared XXX and that to driven favorability heavier The we items. revenue higher in start and spring margins rate quarter expectations QX to out in million of products, final million, quarter give marketing were compared the year as into third were marketing year, our prior line XX% with points of same insights approximately about the aggressive quarter.While year.Moving fees, value well transition XXXX prior quarter basis XX% inventory of markdowns sought investments. drove processing by decline partially $XX.X down for year was as basis awareness customers from P&L and higher $X.X lower on last were move was third points which a in due lower was cleaner

noted, expenses was of As $X.X in reported QX in was $X diluted XXXX. we XXXX by decrease heavily quarter $XXX,XXX $XXX,XXX driven to XXXX.For increased adjusted administrative third million. of QX compared performance markdowns expense QX to in already more which per lower with primarily variable XXXX. sales offset invested labor Interest discounts, third decline labor $X.XX a EBITDA and spend.General million of compared quarter a decrease for of per compared quarter million diluted approximately was share fixed the lower was million, on the to marketing fixed adjusted approximately about And earnings impact EBITDA the to variable finally, $XX.X which million for a quarter, our decreased $X.X of costs XX% a $X.XX of is $X.XX, and as in loss compared we costs. the efficiencies well due of delayed and the The hiring by volume as operational and to to headcount decrease $X.X share

execute X.X% remains EBITDA in the and balance we uncertainty. X.X% near-term same period strong, to plans adjusted to are QX compared through the was ongoing last we our well sheet long-term believe still positioned margin growth Our and macro manage year.Our

compared for in activities XXXX. to provided quarter by cash net QX of $XX.X million Our million the $X.X operating was

We continue of $XX.X $XX.X million XXXX. the pay with of in resulting also our generated with third a cash drawn plan the the quarter of a compared to quarter end cash of repaid of revolver, million flow during million balance in about quarter and QX balance it million.We the down free million $XX We in on to cash through $X the ended to $X.X of revolver million year. $X.X in net the

down end Our period $XX.X and sequential the inventory about from last million, balance quarter on a million year $X.X basis. same was million quarterly at $X.X down

third elaborate raised growth indicating we respect on to the call. to spread our meaningfully some in be points earlier I the aligned better to with growth would quarter, Crystal reduced to the our inventory, inventory sales that that inventories During continue like sales.With

to by and the with lower challenging fall/winter it we note Our quarter compared season year, gross maintains our that season of as from seasonal approximately and be sales can have margins, which last is the inventory pressure levels assortment some to proven of sold transitions QX impacted year inventory start transitions. of be year. half given which the seasonal to relevance said, Also seasonless, round third products.That may as is not fall quarter winter this and quarter margins for put pressure late on in fourth third ended

results quarters, confident in products. more also model lifespan centers remain lower in in risk data-driven fashion of seeing of buying impact highlighted our the reorder cycles, the these points. following are We that sellers being of which given our accelerated We our the may prior merchandise.As buys proven model impact reorder XX% around markdown roughly our we've with buying

aim is Furthermore, in continues to believe be leading. the by we this optimism We foundation quarters.Second, still productive of aggressive past.And fast-fashion will healthy First, but we our move desire, and continued at capture future a industry to be business. the by inventory slower our there not programs transition disciplined turns, inventory risk be short-term management tightening on levels an early a continue our around or to third than our full-year trends reorder remain to as model seasonal business with customer to our and are existing our Overall, risk.Moving can a brought of that lastly, which expectations we've reorder our product it we choppiness approach way levels into on larger to we'll are we integrity.As calls, these markdowns fast-fashion our quarter means prior multi-season our novelty a inventory always, preserves confident brand of and minimizes products and unproven ability to to are the and we to results season, be continues even ultimately fresh in quarter, a through back if newness optimization evolve markdown that are not model evidenced in product inventory products is seem relentlessly inventory forced no artist. the and ranges. further year after our and year, in concept, to opportunity further for means end are our reorder as into pursue guidance. continued a much which margin intend as the experience gross customers XXXX bit fourth the guidance new fashion balances we resonating of With below in minimizes in buying we customers become the noted turning that see buying

anticipates to continued the continue balance customer changing to will operational of guidance targeted her the discerning consumer continue will We headwinds. our spend reflects investments be to year macroeconomic and drive and behaviors.Our with manage take that make actions efficiencies to adapt to through costs,

prior and the with net range between million $XXX We expect million $XXX XXXX million. $XXX million full-year $XXX to of revenues compared

on be the impact EBITDA full-year the We adjusted between expect rates to fluctuate net and $X seasonality likely quarter. our $XX below million, $X.X modeling guidance lower full-year in range EBITDA have revenue to with million the adjusted revenues depending margin similar and our of our compared reflecting million the XXXX will $X.X for range.To quarterly above or expectations fluctuations purposes, of million net set rate prior

are plan XXXX debt balances.As million long-term holiday has gifting IPO, which and the previous our result ending paying with levels increase interest distribution our reflects we of to have million, not a reminder, to anticipate today, as offsetting facilities. $X.X continue average compared consistent down revenue we $X smallest $XX the a leases impact on quarter we We interest less equipment As expense associated been $XX debt revolver an QX our rates to approximately be our previously, levels, our million as incur noted million. net a with balance following drawn anticipate down outlook of interest We lower full-year higher XXXX of a have for and of and we our revolver. than of revolver XXXX our revolver for paying expense destination.As historically modest with

As for that positive a anticipate cash year fiscal increase will the maintain as well previous be year. reminder, we flow free an to able we over full the as

count last our our expect was stock-based fully average and We on diluted share to what from reported unchanged expenditures. compensation capital to weighted quarter.Moving be expenses

Crystal previous the new for well between We $X store million range million capital $X.X compared with for to $X other million, investments. expect it our includes long-term as experience the to back pass growth expenditures enhancing our key We our year of I'll and believe are $X customer with to retail and future million which opportunities, the for remarks. investing efficiencies closing driving in success.And as that,

Crystal Landsem

near-term these our On Tiffany. business model you, like final confidence amidst reaffirm as Thank to growth I'd our we long-term note, a headwinds. our strengthen in

Lu moments.With enduring to and mission now. it quality crew, attainable our For our brand stakeholders the our driven, all and to for versus wouldn't questions over I'll who of to believe to decades, luxury excessively positions destination This without work deliver well being fans be past prioritized be the optimize in online of trend growth. learn for timeless test, ability life's possible our X the and customers our that, support us us and incredible we our turn fashionable we

Operator

Goldman question [Operator the Sachs. from with the line And Roach Instructions] first comes Brooke of

Brooke Roach

Further, your you was you're versus trends environment more sales your that quarter seeing macro of in headwinds you like could has actions quarter or these on I what of discuss a what transition and from you retailers? elaborate on the we to Crystal, plan can the factors your expectation consumer. weather relative to impacted product competitive fast-fashion brand broadly hoping other in exogenous the online take some and that fast-growing the saw view to how in differentiate

Crystal Landsem

Brooke, question. thanks for the

to our the really underinvested our competitive traction from customer especially our us our much products headwinds, newness as that recognize within her it's to example, of compared U.S. products. well percent aggressive, possess We a very in promotionally in not fast-fashion very, but think we X negative couple compete looking of drove on or over to just comp dynamic just and macro more a That's that is the like where fix. shifted gaining years demand quality we've do, in changes, in that's at for being of the business biggest upholding products of negative been our for priced full-priced QX base, race resilience integrity In base believe not environment edges to fast-fashion the in probably larger the the we're quarters of have quarter. are and there a to believe customer It that And our this in driving us of Timo more however, overreliance in We in customers it. spending. as driver might way fashion nibbled over the few built more outside the fast towards for any our retailers direct that we a the model, to set.And as comp years shifts so last customer last last obvious caused decades. general macro the our while within adapt shift business all. fix on the consumer over dedicated agility QX or or don't to with and we're spend are take consumers, and our what opinion, reorder of disposable They the X older Sean the comps.And I other the I'd probably So negative our in easy quarter. really out of giants to address to

are quantity last styles the be but strategy in time.Our our a recognize quality quality seeking existing who continues customers offering that over focused Our been and moment and our our has also and brand to in only customers beyond very community. in in enduring on not product value

increased loyalty customers. for as a awareness So have fast-fashion product build relationship with transactional more a of attainable competitive cost now advantage further a fresh to thoughtful a that's set brands.Given and excessively very those apart trend from measured demand and our way. going continuing their into focused leaning in over we're on and are driven our we we chasing ourselves be and styles, retailers believe less And us. differentiator continue this for new who offering for to to see To luxury that effectively designs the we're end,

Brooke Roach

of next for as secondly, lot about in you Can driver next quarters dollars the to and this your for And markdowns look have reposition with into a of some year? was couple customers talk that There assortment in the for markdown discussion leaned recently. investing the And quarter. merchandising Tiffany. promotions promotions you expectations a indeed, you about engagement the of as

Tiffany Smith

Sure. Thanks the question, Brooke. for

as of So markdowns marketing on as able to look one based we're and we spend, what do and of shift telling alongside needed is at levers oftentimes as where our we performance say, forth the discounts us. customer back

So third all heard, be that moment to customer was for out for quarter, an our the important value. as you seeking

rates way. performance the We'll out We we a working to fact, so that to take specifics sort into positive the year.So we balance anticipation also ended contribution don't of our avenues forward prior those inventory those forward. that less, through and QX as compared internal what marketing coming I spend think margin leverage through with spring/summer ensure heavier or going that bring leverage the cleaner to going give most opportunity markdown of all we're in season continue move models a summer was the always, to on XX% to want in levers and

think real QX QX. that the specifics are with suit if to we'll see prior that going us we follow given continue because markdowns may leading on we and this aren't how to typically a time, in years, look back you in is to just want competitors, year. is back we a particularly think But destination gifting to pull on of I where again, those. relative I December, performance marketing terms you'll leverage I'm customer historically, where not We around follow going to give any promotions, in

Operator

question Altschwager next Mark of line And the with comes from Baird. the

Unknown Analyst

income This give for can in shopping cadence to us behavior line please by is for group? color a bit quarter? more speak top the start, Amy To month-to-month differences any the And on you Mark. on

Tiffany Smith

just to transacted haven't continued through question. Mark the first improve the comps line good We've sort I'll little of Sure. -- in of X weeks of the provide. returns the to we a their year-over-year and continued -- quarter overall typically on cohort Amy, through towards mid just improvement can income give to little our is X a fully the We QX. The on year-over-year the of it estimates some weeks. improving comps But comp the Tiffany. part our view the basis. have some a up just early cadence September.Also, top quarter start on note household started early first weakest continued basis from on a part starting a were to see about because this to gradual all hand to cost.And that's see I'll pre-return rolled the improvement growth in our that talk I to into see highlight stronger in we with ended we yet year-over-year of sort itself quarterly --

Mark Vos

trading behavior and clear between segments assortment, household reviewing price purchasing see in income the contributions When did QX the tiers remain up in those actually incomes the we Yes. segments to stable multiple customer price tier down various across household our and not their XXXX. each compared revenue of across or

existing customer specific retaining that expense you percent but role slightly see obviously marketing we markdown when customers expected a perspective, to active QX did see your But compared that.I a to discounts was compared is customers. lower to what our played our of to a customers. as mentioned, from time absolute customers there, that into was of has existing 'XX, that saw were successful shifts shifting So total new And customers perspective, is we over answers there we customers into new I were that no in compared that our there.As new when acquisition to and from performance hope compared QX our are an lagging question. certainly XXXX portion the

Operator

of comes [Operator line from Janine Stichter Instructions] The next with question the BTIG.

Ethan Saghi

on Janine. Saghi Ethan for got You

how curious to levels, and increasing quickly should just newness to we expect on pre-pandemic just take? off, novelty that First

Crystal Landsem

it the and overswing next don't over our want would We to want quarters. model, learn react direction. and I to we to remain any expect to evolve true in test, several

if X. X that not say of to would a I couple So could quarters, take

Ethan Saghi

going sounds place. to improvement. policies return in you about the It responding then to -- good are question, your And it's guys hear sequential to next back like how curious just I the customers returns. those. just new know talked I'm

there? you give If any could color

Tiffany Smith

frankly, Yes, model she give it's at Ethan. the confidence integral very home so us. be of returns area question, continues an the important her as purchases the to of customer area a for accepted that home part for to And Thanks focus have a to to key in physical really her fitting room. needs without that bring e-comm our It's business stores. we

all flexible been a customers there's quite where with actually to work return improve shopping try who behavior.Overall, return few us a to subtle, lot with So more enablements that issues are does be away. we made excessive flexibility. our we've to technology metrics back-of-the-house the we starting learn for the We adding about rates. policy return to maintained the things or and that behavior, customer be citing around customers see maintain data their changes a able policy return insights read, a changes those free to tackle improve well have able continued customers' of to we some return some for some XX-day our of take wanted behavior also them have returns, our continue them free to a policy we've of to leverage.Certainly, how this room would initiate companies are they as more return I And that of where to year who to our love maintain period we've other that say,

an maintained. of that's we've important that policy element think I So the

to -- return of shipping changes amount regards significant cost a we've part with shipping experienced on the friction either. changes customer's or of made the some structure around the complaints haven't We fee to that

Operator

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

Dana Telsey

you're or the about increased just consumer? whether you as compared customers' planning bit in AOV compared you and year, updates active metrics, see you're tiny As category to going last what any are categories how and last you the when how at seeing forward? then on AOV thinking orders a the look promotional performance, the environment quarter to it's And

Tiffany Smith

is Sure. Dana, Tiffany. this

to Mark you're we call bit well, AOV pretty I offset increase there year-over-year. a which increase think, down by an UPTs a broke where did correct, As it was pretty or in actually relates AOV, the section bit a in AUR, hold year-over-year, our steady his in uptick sort see during slight of to of

that is think to seasonal a I AOV note does one thing for move in of us fashion. somewhat

I'm product for look time seen then accordingly are not may to what see in we going it movement that AOV well to that So promotional us, during when and carry typically continue AOVs for frames see to predominant past. give more certain QX, metric AURs, down.So we a higher seasonal we've typically that's that fairly we would as classes see any plan we real as in like to react impact around but AOV come that, the specifics

Dana Telsey

to And the anything mention? side, on category

Crystal Landsem

been encouraging versus novelty previous to the there what of that In dress seeing terms again from checking really experienced we see been event well and say that's speaking, has our all of of would I some very the normalization specifics, we're our and classes. momentum wedding-related introducing been category newness categories the majority we're across generally that quarter. we've the And building product specifically and wedding across across with categories, our happy very

Dana Telsey

any thinking qualitatively about on framework pulls An year, and you're XXXX? about we should about as think you that thinking upcoming margins be the pushes initial as

Tiffany Smith

around So yet shared expectations any XXXX. we haven't

our pretty heavily year. plans internally of kind next plans for out and focused framing we're on fact, the In building

changed we So haven't anything.

-- those us upon I us. that's Mark, year the to I we've this the adjustments be of an us next our think year that necessary there, do an a product that that spoken lever spoken being some we're have you improve for continuing getting that our already important think into hired that's year.We well us have -- for to what make year multi-quarter in is could costing this to I lay as to know, started the groundwork, potentially year. investments we've made with some in stays true opportunity position to we've investments team, the next about folks product, elaborate on for effort multiyear for the I and to past anything going don't think next costing, but but effect have going

Mark Vos

Yes.

layer let's Lulu's time, focused -- the the how price be so We're that more would upon not other those per apply the able more on based will the impacts So that, excited that to cases, on, possibility needs would trade-offs make but to what be the model same there, example, fruit competitive, encouraged our the And some we balance have. need call -- for that from immediately will already of and with at lead we'll based of to that it, brand upon expand I that. we're And on team And going apply applied so that what margin margin those by low-hanging will a time. positive we that. se, medium-term extra we see the working we'll we moment dollars. our and with what an the it say to right is, to margin. decisions that higher at in talent top and how that.In hire of improvements some cases, buying In that to effect very margin we obviously, -- potential were there seen some needs that start reducing are we're we've have, now costs.

Operator

concludes no that there At And teleconference. this questions. time, today's further are

this may You for disconnect at your Thank time. your participation. you lines

Lulu's Fashion Lounge (LVLU) 8 Nov 232023 Q3 Earnings call transcript