LVLU - Earnings call transcript Q2 2024 | Lulu's Fashion Lounge Holdings, Inc.

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Operator

Good afternoon, and welcome to the Lulu's Second Quarter 2024 Earnings Conference Call. Today's call is being recorded and we have allocated 1 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 second quarter 2024 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 of estimates the call. of all quarter statements represent June afternoon, XX, forward-looking ended the and the fiscal with expressed as press factors, materially our or website can of product ability macroeconomic limited our on year Form uncertainties, and made the our in assumptions SEC objectives strategies, afternoon's realize achievements impact reduction consumer forward-looking our and detailed performance do expectations business, to at assumptions or be well call ended fiscal XXXX, from XXXX, as risks, All expectations SEC, our regarding regarding of date December these on results, which actual launches future on and to XX, achievements statements our continued return historical to but our other management's growth. These opportunities, of financial are references results, this intended statements should XX-K XXXX, second not this filings fact report including could for financial goals implied risks, implementation, around such year on XX-Q subject uncertainties cost XXXX, and results, and with statements demand of our other not be Form the our to our December and that differ various on by environment, this relate statements. These their and management's matters XX, our Quarterly for this including for to important to investors.lulus.com. Any statements, Report the as plans, found filed considered the initiatives expectations, impact ending are which including the release the or outlook performance cause annual measures, market rates

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

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

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

Joining me CIO, Tiffany our CFO, Smith; Crystal and on Vos. and call the today President Mark Landsem; ] are [ CEO, our our

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

Crystal Landsem

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

results the in period losses, were EBITDA of adjusted with laid million, and results preliminary than revenue the quarter million lower net million Our year line year $XX prior expectations in XX% second $X.X $X.X the our period. below with out of prior

operating and adoption policy, return high-margin revenue return headwinds, sales margin slower strong rates of including new our the goals net for limited by contributed was due results higher and profitability on lower-than-expected and in reduced with occasion wear, fixed quarter. Despite markdown progress the softer-than-expected to combined costs expenses, quarter First to declines base. against sales

on top bottom external putting navigating pressure a are line results. of challenges, we companies, direct-to-consumer many with and line As range

enable a through our and culture grow efforts optimization and long-term and our model leveraging that end, elevating growth as amplifying evolving performance algorithm brand robust value deep our our reorder include: and DNA continued our us brand to brand for and evolution an insights awareness unique initiatives, us and assortment; withstand growth. to our insights; reinforce community-focused improved to by marketing visibility on delivering position However, competitive excellent which customers steadily to brand of These potential introductions. By merchandising drive strengths, the fans managing tightly capitalizing volatility market and we remain drive service can near-term and engagement; are confident over obstacles with headwinds. To data-driven these our share expenses to temporary short-term and these word-of-mouth our customer that and to we increase of sustainable reach committed endure strengths to view increased will data that broad we we're and time. customer base

stack analytics and and decisioning, Continued customer investments and better continually to and technology increased our engagements operations improve insights efficiencies. higher our platforms proprietary in drive

confident are by have are initiatives focused these our competitive yielded competencies. We steady improvements in strengths and our encouraged the core across

from that, some of the with quarter. like highlight outcomes So, I'd the positive to

by XX% the margin and in Markdown of levels XXXX, showcasing decline and over Our and for with quarter an second to all peak, agility year, driven the supply QX inventory by XX% business, shift the thanks sales ] to data-driven further losses. year-over-year [ a higher product declined our prior revenue our marking point position. Inventory the occasion for buying improved destination approximately record from net Lulu's year-over-year reorder compared XX% in our and toward surpassing reinforcing weaker life's healthier go-to to of year-over-year margin by our pre-pandemic product position the decreased by markdown model. tightening due sales grew brand our of net as bridesmaids and a lower XX special these sales quarter basis expansion surpassed categories moments. Gross

further and new, the continues confidence in funnel. reorder reorder novelty Additionally, across future to inventory improve, products mix driving

fee exceptions quarter, policy even which the return in pressure. customer restocking resulted in line some boosted an the towards improvement policy, behavior Our we and the led new revenue end previous extended to as top of to return

positive sales in sequentially comps improved trends, initiatives. quarter improving the strategic We our suggesting our which quarter, traction are within of early net on with third progress continuation seeing a continued revenue showing

for value offerings, brand Levi's, D'Amelio customers enhancing with partnership only returning third-party opportunities. Vans strategy recognizing purchase and for interest, highly equity, existing traffic effective, have brand third-party influencer product the brand on not quarter we this social visibility media significant entry have merchandise believe, also the partnerships, QX, both and pre-pandemic In and growth their We our prospective to Our intent. Notable desirability strengthened our but third-party renewed driving for partnerships. new barrier catalyzed and allocations collaborations and enhances partnerships and proven customers. creates opportunities and synergistic our new lowers increased Sisters

our positive sales and and novelty high-volume key performance We driving also favorable reorder pipeline saw continued margins categories. strong and supporting demand for new products in

As our shifts tangible discussed significant momentum actively in We enduring new the prior our about that efforts quarter defines I'm adapting products are third trend excited are with receipts quarters, sustained vision. our the anticipate and generating. quality brand. upholding merchandising merchandising value reflecting fresh we to team's while

more and on major a business best-selling our developments Finally, is fulfillment our items, wholesale in and based introduction processes reinvigorated streamlined progressing cohesive second half. steadily, [ long-standing the the collections with by ] new of highlighted partnership

offering We further and drive partners partners, we to ] and ahead new distribution our both the for and and in-season department our focused remain QX, further [ opportunities, which [ product enhancing wholesale X growth strategy in the IMUs major Looking are with store and expanding working chase will towards ] partnerships, on growth back opened our Lulu's optimizing have wholesale meaningful with half year. retailers. of QX

Turning to quarter. about the favorable less aspects the

costs Profitability efficiently, quarter. of compared higher the of the the return and and pay well net tightening net to half, an initiatives half as the growth align pressures end year. was for reduction that to in behavior orders and of us fiscal by across now a strong Returns we sales payroll XXXX, profitability costs second lower-than-anticipated sales. a include the towards casual still in realizing a $X.X operating model business these approximate to slower better costs executive the believe these fourth of pressure sustainable in on fixed downward to cash as measures estimates through quarter, softer for a room for XXXX improve trend our the growth. These extending team third the the million approximately projecting for rate ultimately are runway can return growth. expenses our from are better to to year-over-year with reduction classes we the of long-term reduction million in XX% of to profitability a price flow fixed positive uncertainty, to reduced favoring continued CapEx swiftly declines partially results shifts and higher rates first strategic from decrease driving concentration cost the objectives, most XX% Our strategic are and for due year cost base. Due are achieve anticipated macroeconomic and higher $X.X in and and into alongside actions implementing these was to anticipate the deliver million, bringing meet management will majority revenue pressured during and more savings expected in and results to products, cuts product following: including by sales goals variable dressing maintaining XXXX. We headcount driven disproportionately allow full mix consumer challenged provide continued while will the and the coming recovery. Capital our to $X.X We quarter fixed actions to encouraged we the said, expenditure home. That reductions position larger operating accommodate company the by

initiatives We efforts, flow brand continue strategic technology and of supply investments in against our assortment cash optimization, remaining and to XXXX product positive. make progress chain awareness

our in full of will brand President amidst cost against enter share Officer. to and strategic He XXXX and into about profitability net long-term immediate measures the engagement and and by as and enhance are half are remain with sustainable drive like we business reductions consumer growth, As quarterly of the impacts alongside weighing confident second priorities. progress encouraged assess pressures other base turnaround customer some that persistent we demand, sales call said, on our our time. That Mark? cost-saving expand I'm year, to Mark and our initiatives our adjusted month-to-month recovery recovery providing and We outlook business. With that, withdrawing trends over our improving updates the will our EBITDA and awareness macroeconomic initiatives. slower-than-expected customer turn Chief revenue and year a guidance I'd Vos, on the Information over we optimistic our

Mark Vos

by and interacted quarter. start the customer I'll an Crystal. our during you, update with Thank us on providing how she

[ are repeating of counts quarter-over-quarter basis. a active in the customers by encouraged on Also, prior declined strong loyalty both compared and in of [ are remain repeat And ] increase While again penetration the opportunity. second program we revenue loyalty active Lulu's entrants growth brand's year-over-year. indicators future to customer year, once and new total penetration quarter that membership program ] customer and relevance grew

customer has As mentioned inventory potential new looking limited are quarter, deal. that constrained last acquisition customers of segments for markdown a the

our improvement also showed acquisition sold segments ratio largest and assortment segments [ aligns our The products However, price purchased, with merchandising strength customer price our acquisition new only of of full their these the segments, important which performed increased in new and are around best new optimism our ] products relative customer quarter-over-quarter adjustments. in comps. full an

quarter merchandising expected buying focus. our receipts The to reinforce team's third further and

novelty about the customer new and product these optimistic ramp-up are from We introductions. acquisition

and per we customer a to higher last year-over-year value order increase in customers, average year. for unit retail, Additionally, value higher new total driving saw and average in and was both compared QX a order returning QX,

merchandise increased efforts due combined and our markdown effects of to costing the we sales. margins Additionally, lower

and much company in international the ]. I'll U.S., growth total quarter. year-over-year our brand in growth strong and sales a our markets, percentage top efforts. around room offering product optimizing we some and in for initiatives small optimization of XX high investments expansion units sales, and of another see our the our the outside remained U.K. Canada, the now margin quarter top current with largest strategic abroad building updates by model, assortment our double-digit consecutive sold achieved countries international making comps including our price While of product related Starting line [ and progress activation momentum selective share our on U.S.-based bottom shipping during differentiation growth Mexico. We

preferences best and on newer margin and through merchandising costing and styles strengthened product our highly to buying teams improving incorporating of the refining assortment remained Lulu's Our core changing focused product team. our customer, our meet evolving

quickly, meaningful saw forecast opportunities. In style year-over-year, offered. And expect responded value new missing into and with algorithms provide [ merchandise and New to buying and too improve demand. and and capabilities, cycles ] products' sales novelty potential share in frequently our which depth around predictability better beyond. and both varieties positively tested customers could year-over-year fully this we while of arriving out we growth we product new products trend substantially QX, color visibility QX in sold Once start order ramped, of impacting insights increased

external Additionally, like which [ we earlier data trends, macro sources demand see opportunities weather, patterns other and more data in accurately. ] and geographic detect

network costs dependencies across ongoing continued diversifying certain Our enhancing vendor fabric on and reduce to vendors, countries has product consolidation to by sourcing purchasing balancing of consistency. improve geographical fit and origin

On the holistic our line. optimizing returns been shopping have overall journey front, approach fit-related fit the for we customers, a that to reduce enhances our working while through bottom

starting shopping and over with processes of our increased rates are return to refining enhancements have boost apparel. return fit-related and improvements QX in of impacting size Lulu's from customer and our availability the fit-related reflect rate. Improved portion shopping full Our communication and well consistency. customer for customer fit select We are expected and a expanding strengthen several will with potential overall also our of product fit have forward. base assortment key of collaboration possible, rates channels are sizes. engagement return very inclusivity readings adjacent not to XXXX will shipments in customer fit flexibility experience least, QX quarters. Initial on excited streamlining new about branded positively with and we belief where Lulu's as information but effect increased flexibility, to began and vendors, greater as believe, our consistency that have increased significant QX fit benefit addition XL These experience. Last impact contributed improved 'XX positive the a double next Initial support size broaden the reduce acquisition in

QX, to QX by our return started policy costs. with highlighted, show reducing return late mentioned together positive QX changes impacts initiatives, Crystal into As before and

new window. return As a a reminder, the policy modest restocking a introduced tighter fee and

our return discourage to excessive and continue returns will refine minimize monitor We unprofitable customers. and policy to

differentiation. Next, are brand initiatives support in and we customer making investments that brand acquisition, retention

our brand our distinct Friends goals and with trafficked image, a of all brand. on our early QX As Life, of our campaign, our the in billboard took life's a for the discussed Times on first core the May, Lulu's last everyday call, role which in launched the customers multichannel moments, major communicating center in campaign for Friends Square, to for Life extraordinary. In brand first reinvigorating stage on heavily underscores

our more Our brand Chicago followed real-life the Brunch funnel celebrating for and which and Lulu's promising visitors at customers, were resulted website which initiatives a operated ever and social brand XX% Besties full XXX community. The kicked brand That channels. influencer RSVPs that and approach low more than message off Nashville customers. The [ in new in to effectively campaign, presence, funnel series, fueled in campaign differentiating in great to May, and by prospective and in-person of several in many Life we bridged connection than Friends directly full ], strongest activating June, and between activations online and the marketing CPMs digital on new return numbers first-time spend that advertising new the Lulu's showed incremental ad of demonstrating a hog recall our converted existing received

the ad insights into gained In and formats. addition valuable campaign platform to success, we performance

Boys The including D'Amelio and brand our successful, Lie, our early Footwear. campaigns. In brands, influencer launch reach Levi's and [ edits, Levi's, third-party sales platforms. partnerships, leveraging driving relationships. we we Lulus ] to ramped volume in further website of expand collaborating [indiscernible] Vans quarter-to-date, approach these and amplified and investments with third-party quick to going several us [ in refine our social We've will [ awareness in launched announcements, with after announced creation reach increased particularly and partnerships, conjunction partnerships, have confident quarter and on brand improve and QX, campaign iconic and the other stock introduced sought was media content brand up highlight ]. In allowed our ability by which have ] to enhance our second brands' the next in our exciting feature to Loves forward are We our performance these out have

We viral, awareness, forward influencer [ site. to collaborations Notably, [ on on to amassing ultimately, on went forward edit our we these [indiscernible] of our and [ further encouraged in partnerships upcoming are QX Lulu's the ] these success potential sales. Building and with Herring's XX,XXX to Herring X.X Deanna the to and Kennedy in views look expanding relevance Lyons and over and brand million customers brand with early collaborations return on impacts reaching in creator look the network. influencer their and new ] edits awareness shares. We're QX, by in optimizing brand partnered we nearly collaborations audiences strong Deanna and drive and

web with strategy resonated all the Our Little we life's we believe Sin wardrobe Lulu's Original reinforces by featured launched and of addition has ours. further show's diverse being on and stylists Pretty customer in collaborative influencer followers community the giveaway, page, also for million show's a and hit mission our XX show's curated the Liars, post to media the reaching moments. In QX, leveraging the there edit,

grew publicity in Our increased this and media users gained outlets. We consumer initiatives in financial inbound brands brand, to we boost the press We Lulu's and increasing Lulu's impact despite QX. are for maximizing strategies. execute our cost in continuing the value and confident and awareness on in as customer efforts our reach of and coverage broader strategic and QX momentum on and placements anticipate acquisition revenue in reduction publications. expansion driving our momentum build doubling various This media significant retail, top-tier quarter, securing interest believe channels efforts from and

customer supports enablement driving across experience next focuses on multiple Our customer that channels. and priority engagement technology

and a saw Lulu's QX of conversion improved users its increasing overall share Year-over-year, by app usage revenue. healthy and encouraged are of growing We growth in app rates. the

Lulu's larger conversion product website, Additionally, increase our more use website investment featuring paid images prominent in more registrations. traffic has the returns. yielding our and increased an in and higher on ] is extended engagement driving The app video towards and redesign, led strong rates to [ account

Our to engineering revenue experience product exciting continuous map shopping and an the and have optimization further discovery. enhance road teams

investments centers. operational enhancing our and with efficiency in strategic robotics are distribution We automation in

times order in improvements the our center feedback to distribution mentioned Pennsylvania, QX, reduced As accuracy, last cycle largest we call, in unit early better added in Eastern economics. on and automation shows and

you've our impact hand our progress to excited to thoughtful you our a Smith, color I'm heard, maximizing their Officer, in our on cost-efficient provide team customers. And I'll delivering strategic now, continue more the we place Tiffany make have to financials. Chief initiatives, Tiffany? about and products good dedication to Lulu's to As the right and on over manner. in we Financial

Tiffany Smith

Thanks, Mark, afternoon, everyone. and good

orders net quarter second Our with overall and return placed of $XX higher by million, contributing partially decrease XXXX, decrease total quarter driven in average order value. Markdown approximately approximately net gross improvement. for a XX% increased XX% second decline to margin the was the revenue to year-over-year, were compared sales offset by the rates, revenue XX% a down

notable saw our in declines also We the casual business during quarter.

of period line driven XX of categories. margin by points to some changes, the in honor last at return pressure. Gross decision a lower product toward saw the and despite to result year, some to increase an through previous of revenue an resulted the into in to improvement and As shift customer XX.X%, quarter return policy, customers markdowns top fee restocking QX exceptions new a the behavior, return higher-margin of implementation policy basis we ease part ended our increase in which same our the compared

some selling brand and expense P&L including up customer to first to brand XXXX increased from were XXXX brand launch QX to expenses QX initiatives, the insights items. due million, and Moving marketing XXXX since about marketing campaign $XXX,XXX down into the give engagement. drive $XX.X line awareness

to expect a driven million, over $X decreased the to from from administrative decline volumes expenses reduction $XX.X comp this value well expenses with lower XX% QX legal matter. variable benefits operational stock about accrual lower for were by materialize We and and primarily marketing labor a decreased pending efficiencies. Quarterly generation $XXX,XXX lower sales G&A by was incremental and a as which XXXX. This quarters. General expenses million spend increased multiple included as costs,

achieved our XX% we resulting the G&A in decline expenses leverage this G&A in non-routine a in remaining on compared Excluding in decline the quarter net item, XX% to the some costs, revenue.

for worsened related costs valuation the a by a G&A loss as million $X.X to gain noted million net $XX.X to same the our legal by noncash and the was on compared of the million tax XXXX's $X.X million as to of year. last approximately during EBITDA matter reduced deferred The quarter our establishment included period was $XXX,XXX to assets loss net tax by EBITDA compared accrual in quarter a adjusted provision the expenses. Adjusted QX Our allowance non-routine previously well income loss $XXX,XXX expense impacted for due increasing elevated second net second revenue. fixed of $X.X

Our was QX in expense X% compared quarter adjusted EBITDA the margin was the negative X.X% $XXX,XXX for year. Interest last in XXXX. compared QX period to approximately same to $XXX,XXX

diluted a quarter, a per compared XXXX. the decrease share of $X.XX the per we of of $X.XX, which share is a of quarter second in loss $X.XX reported to For diluted loss

originally $X August Bank XXXX, XXth actively agreement On with agreement. In term covenants all million work Turning our of financial liquidity. second July reduces We credit we second revolving by on XX, capacity the November the balance million repay of provided the reduced $XX year-over-year amended business to basis. extend of XXXX net on cash and representing agreement a XXXX, to with quarter XXXX, debt million believe financing. At end our of The future a mature to facility amendment a the to we for applicable set source remained a America, sheet year-over-year compliance continued was year. flow which to quarter The we borrowing from of million was our credit quarter, on amended to generate short-term, partly to a XXnd, now we of Similarly, of borrowing reduction capacity XXXX. toward $XX the matures XX, March finalized in revolving original $XXX,XXX cash on a generated sufficient operating with decrease decrease and the million intended cash $XX is the basis. while our at $XXX,XXX free activities, IPO. the million under prior longer on with $XX $X.X our in this

the paid second net quarter, of revolving in we a the million. our position balance, off During line ending credit of $X.X cash quarter

Directors announced last to stock. Board common XX,XXX we stock of As of ] repurchase $X.X quarter, shares a program to million about our approximately up repurchased [ authorized $XX,XXX our repurchase In or of the stock. second quarter, worth

continue to We position. holistic liquidity a quarterly a to our while on highest the basis, capital driving allocate will view maintaining healthy take investments on a return for

at year-over-year reorder This Our $XX.X last net decline year. in as exceeded XX% from inventory the $X.X supply period down million year-over-year reduce inventory we about balance end business. continue our the revenue million, was same XX% of our lease decrease quarter to

guidance. to on Moving

net and we ongoing expectations by pressures, headwinds persisting the EBITDA quarter. are some previously third would sales to outlook. revenue full driven for like the Given year insight provide into our and withdrawing uncertainty adjusted the issued consumer macroeconomic We

July Our low single-digits preliminary in in with net comps. the year-over-year sequential revenue improvement results net reflect for the a negative month of comparison revenue

projected to July and slightly clearance expect seasonal challenging due the negative year's September. a single-digits with more in last comps to We this August earlier return promotions

compared and million quarter, X% the decline a revenue between XX%. year-over-year last reflecting net we anticipate same third $XX to to between million of in the $XX.X and million year, approximately period For be $XX

includes the profitability a are XX% trends. The in with needs current XX% include result implementing compared fixed anticipated This macroeconomic As margins in the and of of payroll for executives cost for align of the headcount timing carefully cost light with recovery. quarter. fixed first are to aligned cost our outlook approximate with we our half the uncertain manage providing our reduction of reduction we measures the and the expenses and members in process from continued the of we to and improve refraining management of an team. In as for the measures, costs measures sales an to combined a sales business current our third better growth profitability on XXXX to reduced environment, macroeconomic execution reduction decrease pay certain updated cuts pressures operating uncertainty, from better resulting reduction half, and slower second

by project closing as to reducing reduction of are now expenditure remarks. our XX% capital and year million of for capital it the expectation $X I'll our between part be with expenditures year the We million for to for $X $X.X Lastly, cost the approximately pass previous to XX%. back Crystal million. And that, plan full we efforts, compared to

Crystal Landsem

Thank you, Tiffany.

that and profitability in our us engagement We position are initiatives our efforts confident awareness strategic brand year. diligent coming enhancing in for and growth customer reduction cost with coupled sustainable the improve

support as continue attainable to Lulu Thank excellence for amidst to unwavering serve forward fans, it we I'll turn over commitment next now. dedicated brand crew Our to deliver our that, to updating earnings We and you shareholders operational will well us your call. With customers. luxury our ongoing look macro volatility. to you to on our questions

Operator

question with first Telsey comes The Instructions] Dana [Operator Advisory Group. from Telsey

Dana Telsey

for what health think back Crystal, mentioned you framework you for Any consumer categories, with landscape sales and -- and the there changing you about whether of how you're what's in but and you're competitive planning year promotions, seeing the EBITDA. quarter, out of addition the adjusted of gave provide in could not core as business, any out some you pricing, third the the there? the half the your to

Crystal Landsem

Dana. question, the for Thanks

we and just we're flat drive withdrawing quarter -- challenging and general still to an reflected customer we in roughly be customers inflection for also is full the us focusing guidance pressure our to guidance. can growth a discussed profitability, to that due is high volatile see just customer continues on great third seen All within and more opportunities to under our pressures quarters going especially and we've that said, into environment. What's our does at of business believe the in I our engagement think really to active year this July, been And various month. being EBITDA, where continue over for we've macroeconomic level, also the conservatism several in last and recover.

encouraged by So we're really that.

I just had because taking is is recovery think than the anticipated that high level longer we of well takeaway underway. consumer our backdrop. It's the

Dana Telsey

And then in framework? on terms the adjusted of any EBITDA,

Tiffany Smith

Yes, Tiffany. This is I'll Dana, in. jump

revenue So more that the working cost have given -- because during in confidence, we're I obviously, that reductions, third we we But the we think quarter announced to seen we the as we've pacing gave revenue through call. -- date. some announced guidance,

are things those of going Some have to benefits. more immediate

the our to all working in -- the And of sales we're to we're back adjust there that slower through of adjustments the make the as that recovery. But careful pull I at the because longer-term our cost hard too slower-than-expected around be cost to that. noted work business want too we to changes. structure, Some and sort building better we've the flexibility I want to not align still through we're sufficient as business, reading momentum will seeing reductions puts Crystal hard all momentum push jeopardize sales timing and that as properly same also on the of on with to business. ensure possible to takes of time, macro in made that the maintain and seeing and want these sure have the benefits. We're much this, we

Crystal Landsem

to Just add that. to

[ to anticipation prudently the choppier also seeing areas where business flow cash at consumer grass nurture of I our managing think look half. issues the our is it is, all in to the ] the to but back potentially positive in the in goal our way momentum, we're a continue and

Operator

Sachs. question will from Goldman next come Roach Brooke The with

Brooke Roach

in a planning I selling marketing item half engagement deeper within half? forward? you little How line should was to the dive the momentum we in could the fixed that And consider back back you recovery plans continue have sales? Crystal, the are in variable and versus sequential bit drive that on the hoping expenses are going expenses there on that and you

Crystal Landsem

Yes, it's question. good a

is spend. spend. where marketing, quarter tend based our we're for and across there's pressure For and really, typically discounts us, where paid we optimization more to marketing consumer moment on in markdowns, when and performance the third marketing in that the the of getting fourth and levers cash it's an use And the pull best on

the with near I for to have invest, in general sure but as brand that think about that seeing are term very brand. just much the on equity how we side, long-term. said, is payoff spending we think way cautious because the to this to positive where for is the from in interacting be for and are the as us we're we're customers But momentum and it is our continuing momentum making the prudently about brand

back we're [ year done the ]. buck macro, the to and and ] in So, [ I the the where spend, best reactionary discounts markdowns, to truly seeing that of half past, and throughout we've way across the takes would expect which it marketing for the see puts the is bang

Brooke Roach

the a levers cuts talk you pull and can half about the and elongate beyond about current that to XX% little thinking and follow-up, your free How the line versus continue expectations? flow near a As today? the costs the of recovery in medium-term range operating of the both should bit cash generation are you outcomes to margins on announced expense business profit reduce time XX% defend were for you second can profitability that to

Tiffany Smith

question, Good Brooke. Yes.

cash a current flow -- time, for free big -- really at think priority positive the for is us. I maintaining cash flow

could are, we that in And the The said, so, that potentially needed. I nature. levers headcount ones think pull we you disclosed largely were as there call on as other

individuals. But are most for pulled certain have We lean limited have in pay been already certain what lot more to can and I around part, done could in lean running most have headcount may levers a of given executive the there, we be think fairly pretty continue some to of cuts a probably there the we we little in areas pretty terms areas. There do A headcount implemented. but felt without team where grow reductions we it. been I continue the doubt are bit

it's But it's areas going other where that I we I I more considering think share meaningful make given don't reductions. we of have to specifics fluid. point a to think more types be spend, want at bit this G&A can other

Crystal Landsem

cost a as highly our variable. just is reminder, And structure

from So structure our proportionately, reduced were if sales our be would expectations, also then yes. to cost worsen

Operator

with question Janine comes BTIG. from next The Stichter

Ethan Saghi

I working I place what's category more softness. you not I just Janine. those you know to wondering seeing address the terms was casual on of some if for the in on strategies business wondering, in is the as was Saghi highlighted well give assortment Ethan color could some trends, in have just and you issues?

Crystal Landsem

Yes, it's a question. good

rebuild moment, So customers for see. The was I us we their we're That second experienced business bit fine in we're which reorder we over the to is we in given set. really we've to that space, time, the and great going of seeing competitive recovery special that's in last had ] little had it's a new it mean that as continuing pressure more differently, invest in nature quarter, than taking just leaning that casual But pressure to just comping is to our most consumer the on as anticipated. just robust the the in to well said, to space that bridesmaids customer site testament year. continue improve taking record-breaking and longer Say with funnel to which the longer been [ a special the but a was occasion business.

Operator

conclude as you session will presentation. as today's attending for well question-and-answer Thank our call. conference This

and have disconnect may a wonderful now lines You your day.

Lulu's Fashion Lounge (LVLU) 14 Aug 242024 Q2 Earnings call transcript