- Earnings call transcript Q3 2022

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

Operator

Good evening, everyone. And thank you for joining today’s FIGS Third Quarter Fiscal 2022 Earnings Conference Call. My name is Don Penn. I am your operator for today’s call. All lines will be muted during the presentation portion of today’s call with an opportunity for questions-and-answers at the end. now Ms. pass would to conference I host, our Instructions] like the to over [Operator Head Investor Fontana, Jean of Relations. Ma’am, the floor is now…

Jean Fontana

Officer. Thank for joining and third And found in thank to can press afternoon afternoon. which FIGS release on Chief earnings this results, slide Trina Financial quarter Spear, you. discuss are stockholder Investor Executive the our call and XXXX on in be Turenshine, released and Relations website our Co-Founder today’s and today’s Good our deck at Officer; call we you Daniella ir.wearfigs.com. Presenting our Chief

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

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

discuss measures certain the release will non-GAAP our today. and to believe deck these which comparable Reconciliations metrics, measures in for we Finally, understanding are useful business. most their issued we measures are of we included GAAP supplemental non-GAAP shareholder earnings

FIGS. like to of Spear, Trina Officer I’d Now, Executive turn the to call Chief over

Trina Spear

growth of performance XXXX year-over-year, everyone. conference Good for financial devotion with Jean. their the gross and afternoon, community. the and you over We third for Thank want XX% revenue call. EBITDA FIGS XX% quarter third I delivered adjusted to margin for for to quarter margin work you, net hard Thank team XX.X%. us the of entire joining our strong healthcare thank

the active history. by led is to by XX% LTM highest our customers of in million customers performance expand FIGS’ number Our quarter grew any basis. new a on focused This an second of community, $X.X to which our effort was

record FIGS. of and as customers a to have XX level delivered lapsed customer defined who We also returned months for since reactivation, have

XX% value up reached we customer continue to we Looking increase in in of XX% lifestyle from And of revenues growth the XX% finally, average last layering AOV, sales expansion and growth order our Net delivered generated at or offerings. XX% international emphasize revenue. per strong a quarter complete active with Lifestyle system our year-over-year, net also of performance revenue. $X the our business delivered increased, with net year. as

the trends many the metrics frequency including performance, pronounced more key towards to of September the healthcare believe and two more continued quarter-to-date. attribute We on became heavily operating strong weigh showed end our These slow. of inflation, trends, rates began our first, to our macro of softer professionals. While to level we factors, sustained this

their pulling surveys favorite remains that customer on tighter due own their to FIGS back but us are they tell purchases Our brand, budget.

Secondly, not recent lift color the have same past. generate in we seen launches the sales did typically

the outlook. these expect we trends remainder the our therefore, through are reducing to quarter, of We and continue

headwinds, While control our we forward. drive control we we can business can’t macro how the

needs. to meet listening focusing professionals conditions, our to adjusting on macro are We healthcare product the innovation their to and

Our bring to excellence deep evolve connection professionals to drive community. fuels with continuously our business our healthcare our and

healthcare period. continue advance challenging leadership the investments managing make our position while the to We strategic will carefully through to in industry, costs apparel

solutions insights most. receive with and data the healthcare want our we both feature past, on have layering innovation offerings, our we strategic discussed to strategy which our we system. from By together our continue community, focused the our in our with product the products is design improve at up the product priorities, lifestyle scrubs make and business leveraging creating to Turning and starting as innovation, customers

and excitement in comfortable holistic more customer and and Cargo our around the even our this continue and launches which where for. comfort new has highlighted and We more selection expand our are of we our lean to We product loyalty functional, our to the acquisition. products color new innovation while demonstrated business, incorporate are newness. solutions-based with new launching new continue functionality already Collection, continuing tremendous approach colors. approach as scrubs amplify develop to we success approach enhancements This products style believe In into to drive and technical, looking will colors, that both we customers will

out Scrub campaign. during hours Rafaela Breast sold our and For our Cancer example, within Awareness Jumpsuit coat

core of As our result demand, this strong the expect offering. we jumpsuit to a to add

has office-ready in look needs innovation to example year professionals. strength ability XX% drive with lifestyle helped FIGS have XXXX mainly collection system. dynamic The an UPT results. to average lifestyle customer, This reflecting also illustrates A launched layering the great to broader than our through purchasing increased purchases in offerings of including $XX first $XXX. that XX% Our deliver double-digit UPT addresses average see grow is without. orders more growth lifestyle customers encouraged in than of to of contain higher we with This and fuel LTM the PRO. attracts lift new as AOV, our third polished were healthcare lift into lifestyle We continued offerings TAM. growth to which quarter, in of from our performance excellent the earlier a in This that on orders offerings how offerings the the purchase to lifestyle net continue active per driven this revenue customers continued as has

Our positive our collection the with customers. and resonating expanded physicians a from and entering dentists, loyal is FIGS community response driving

continue look gaps greater in uniforms. customer’s new of introduce we our we flow even to ahead, and as products, identify As points an pain expect to we

scrubwear across portfolio developing solve to and and expand we to our lifestyle We will our within use expanding Within offerings also our fabrications options. style are existing peaks categories. cases more continue

not mind. Packable styles. cold for for outstanding the healthcare in bought we on meets outerwear an were our traditional business, shifts success needs. alternative lightness Previously, on-shift with constructed leases requiring For functionality that strong professionals have warmth, with where our building needs their are seen perfect professional new from We example, We Puffer, the and delivered our of and launched brands, mobility. which we recently quality healthcare lightweight demand

can versatility. customers be and worn puffer our Our giving greater shift, on off

soft also is launching sizes, excited later for to XXL are our This We from news ranging be great year. extended to community. XXL this

possible critical underserved for our to extended of We are been and the desire large have responding our in sizes is professionals. to shared success brand best for component to healthcare our ensure a their and community that FIGS. healthcare fit to of has segment a optimize wear It we diligently working experience the the

healthcare to X the and the see active we awareness, end over just brand XX% building growth customers next with approximately QX, significant Moving a in opportunity. to of U.S. of million penetrated continue U.S. professionals have at

As in I during quarter mentioned, digital We FIGS acquisition, environment. added macro quarter channels. of within media we the our marketing customer any despite highest social the particularly the invested new to challenging second of new history number customers in drive

to We into leverage plan health share and align care further we moments to channels. will our be audiences creative multiple to We and outlets tailoring lean our to and out-of-home digital professionals YouTube, with varying mission TikTok and continue purpose. OTT, brand where about our and educate

turnout in-person We were to This the in our Philadelphia new as our other Thomas touch launched to activation opportunity three-day and we offerings out-of-home, excited see see took at products. a included healthcare strong hospitals. the August. in-person and near event Jefferson Looking professionals feel our and University

to This quarter, community. our to also topics on are continued we moments know we deliver healthcare brand important very

breast piece our Cancer For limited Awareness out our month, we cancer color. launched Breast edition quartz campaign, highlighting

we $XX,XXX support health part As to to women their donated cancer Center of community, Kettering program. our commitment Cancer with Sloan Memorial care the breast young to

integrated the launch express For to healthcare multiple their get allowing lives. FIGS to plan professionals campaign in holidays, channels, everyone across giving social we gratitude our their the to gift to

with the expect in gifting with and sharing call to We back also they stories their as inspiring history humans. action give be a #getFIGS to celebrities influencers movement biggest to our

and appointed him lead Sunil Chief strategy. excited We With to am in happening share record pleased are which as brands activation Kaki at we lead building we mile our proven Millennium to digital To our knowledge, significant now. and campaign that marketing Officer. marketing into the our have deep Chicago his track also incorporate communities to I Marketing efforts, in Park, plan marketing is right this

the turn customer engagement, to for new a now our elevate we launched community. healthcare more recently Let’s to we experience engagement loyal community. where We app to developed meaningful continue that look with our for drive mobile ways to customized

Awesome community raise purchase Humans. app care wellness this personalization well extend another relevant way remain mobile the more support. enhancing through how connect enabling the through we beyond advocacy. supporting our our on health serve deeply us and features committed is to we our content, to educational with more incredible to experience, bar As At launch community FIGS, This of new

D.C. on to Capitol training. our and and We to offices advocate met we including mental congressional safety burden community. of many this to part As Washington, Awesome Hill with the which There and legislation, forward. in professionals House took September to conversation leading are effort, to Bill strain for call nine health, White address, Humans the pay, we reduce comprehensive issues healthcare on XX move the this

In FIGS at continue professionals. our healthcare we be addition will to deliver that important an advocacy for way efforts, philanthropy our many other to

presence. by very our saying progress growing Finally, about are let nascent will talk international with in I me start our international and that pleased we

on markets of the These in As we markets. in we have particularly the barriers last the experience Canada, international customer we supported conversion our entered. call, revenue improve XX% efforts European with discussed lower to steps performance strong took and to U.K. and growth

awareness marketing customer As enhance expect language experience dedicated support. brand we translations to focus through on driving we the internationally, and

elevate In the marketing the to to addition, engage with localized through campaigns experience plan community launch we customer tailored messaging. and

globally. highly are growing for demand brand FIGS encouraged the the by We

the business, seek plan As in a and we FIGS. quarter, far, countries Israel DXC can the We demand focusing quickly. where the we U.A.E. markets opportunistically for expand entered to capital advantage, we Zealand, gain see as on light, fourth New Thus to we relatively first-mover enter the have

invest to costs. growth, dynamics we With challenging micro position our believe once let long-term, We expect to to this consistent over us managing long-term the we the strategically microenvironment me improve. While will deliver over carefully that, especially remain intend it our while profitable the the Daniella. in turn best growth in near-term and to

Daniella Turenshine

begin review performance quarter with I good afternoon, discuss a Thanks, will of and outlook. and third our our everyone. revised Trina,

to in quarter, AOV. the UPT in lesser strong average XX% system. net a by $XXX increase an led and AOV to new Both in XX%, reactivation $XXX strong lifestyle primarily or to per a compared higher an AUR. customers, degree drove revenue to than drive our and those product were reflected XX% without. a or globally $X initiative To pleased containing basis benefited active awareness LTM QX per AOV a among unit deliver brand lifestyle in degree, drove UPT to and grew ongoing customers. by from to higher We XX% up increase reflecting orders the AUR continued power offerings, and the response active the lesser existing last from UPT layering year, quarter in year. QX higher net transaction unit events also higher on due retail last UPT. customer XXX, increase to revenues last our For million, of to an The from million and drove third higher a grew Orders promotional customers

the we on believe operating frequency, delivered base our we in customer is environment performance the strong macro based trends increasing. in metrics QX, across more While of purchase key impact recent on

Trina color did launches addition, not meet In our stated, expectations. from revenue as

year, also decline, the to promotions freight from XXX-basis-point mix expected last a for costs primarily saw product airfreight and a innovation due our was take rates. styles QX and The colors. mix. holistic of expectations steps freight product of to approach increased impact more XXXX. To freight an new taking in lesser higher QX XX.X% was increase margin The extent, XX.X% to QX above than an resulting costs. the compared to and lower from our usage velocity result, are was we compared XX.X%, strategy As due Gross increase we to ocean higher and a in to

QX Moving revenues, lesser storage forward. to XXXX. pulled $XX.X million, house operating selling rates. million, fulfillment, QX of compared to was including by for to representing net costs QX inventory expense revenues, primarily within we net $XX XX.X% XX.X% warehouse QX expenses, due compared XX.X% in impacted shipping necessary higher for This higher was degree, XX.X% representing a in expense was XXXX. Marketing expenses of selling also to To to

customer new to mentioned, we investments Trina digital As made drive we where acquisition. saw in opportunities

ways one customer tested the to spend, to We to also mouth, brand out-of-home as the expand past, healthy increased are number awareness. word the new shared to of what of effectiveness we maintain driver acquisition costs marketing with of have able our we continues due we Consistent be customers. which in

in highly potential and points to in has marketing scrubs maintaining With QX to largest focused not accrual of was healthy a lifestyle first-order growing in of that decrease, the we due discipline X.X significant untapped XX.X% top is approach our believe for healthcare active be $XX.X million way. and donations. compared alone funnel of our million, XX.X% northstar, we XXXX. on change changed. contribution profitable our are expense We representing community. to a mission G&A and to the to investments margin Of At provider XXX brand are have that a positive for charitable customers, the balancing basis net and first-order in apparel on discipline XXX-basis-point is that the a as the methodology right we U.S. QX in revenues,

from Additionally, million. benefited of legal G&A fees reimbursements totaling $X

bottomline, adjusted net adjusted However, net offset this and $X.X income for and diluted is to or respectively. income QX. compares Sarbanes EPS the million by EPS was was net Adjusted diluted million $X.X increased to Taking per $X.XX the as XXXX, associated our as EPS with quarter. company income and diluted of $X.XX Oxley in implementing costs share public was in adjusted QX in $X.XX XXX. this $X This million partially

an strong $XXX.X with adjusted balance the Finally, our of cash of $XXX.X quarter XXXX. finished margin of EBITDA sheet, for at million on remains the million QX adjusted totaled and in third compared for QX XX.X%, EBITDA quarter. $XX XX.X% to at Touching our we end million. the equivalents Inventory cash

call, of support could adequately experienced first styles the limited the As in weeks second supply decided fulfill to supply we we chain customer on decided Furthermore, we launches. demand. our the increase given our in and of challenges bring to styles discussed the year, planned on quarter to colors to half we core we edition earlier ensure

build even than As came in a planned. the result, as saw quarter earlier inventory we shipments through

colors made end on is XX% a of composition from inventory the down up Breaking As inventory, XX% above. seasonless, always-in-stock risk Approximately in pulled styles due to approximately Over to as The of in XX% uniform our mentioned carries and we and at early, QX. XX% which looks obsolescence colors, result, hand. is lessened QX. in nature. product’s in-transit future similar styles that down I core

get We back will inventory in work line. diligently to

order We have in supply updated to our purchase time. weeks bring down future over core our of orders

our get are promotional growth sales maintain our with will prior The inventory healthy capital to we us We sheet. and launches. to key is strong addition, inventory strategies priority In these levels from move free maintain measures by through taking action balance inventory aligned growth enable manage believe optimally to mid-XXXX. more to through debt working

we expect we recent context like on for expectations Moving and what place. on have the next on some with to year for Starting topline. trends quarter more and touch to the initiatives based I’d provide outlook, in our fourth

impacted we assumes expect mid respect range. previously-expected expect to offset revenue We growth a versus be With slightly macro net rates active rate, to continue a last customer be strong by quarter be fourth the that growth by environment. frequency continuation customers will challenging than single-digit lower year. of in and frequency to will demand lower AOV in partially This the

color In line addition, year. as lap launches more remain trends, with launches last sales the we lift color we expect to recent from especially record-breaking in

average order value. to Turning

of further AOV due now pressure last expect color inventory past XXX growth as had the promotions launches. from to we through year, QX we work in see While deceleration in anticipated to to deeper comparison we due tougher a

in highly sales macro gravitating holiday customers While will even we lower we expect the We promotions to. promotional environment, current that means more recognize what period in is are to from discipline growth are the committed come the given activity, which if maintaining be to that promotional, short-term. our

long-term managing maintaining prioritizing are and brand business we our for integrity. However, success

Moving to gross margin.

rates freight have earlier, mentioned As improved. sequentially

last our to expect remains for deeper Therefore, by unchanged fourth we gross However, quarter. outlook versus be the for promotions year. offset this margin

Looking selling expenses, expense. starting with at operating

expenses in and continuation greater full storage to we extend of saw than inventory inventory quarter expect additional to deleverage costs. into the costs shipping QX the of We expected half we related while a to of are to first the XXXX, These due higher take action levels. elevated of reduce

enhancements plan our elevate the we to for make fulfillment fulfillment Additionally, business starting XXXX, customer scale times as to our to capabilities and QX and growth, increase experience. in to we flexibility reliability shorten future

similar of marketing. a which to to We continue initiatives, a horizon QX, time expect awareness be expense have percentage brand we longer than sales to ROI as drive marketing as performance

full we new attractive spending in now marketing the we an For opportunistically above saw as XX%, expect be we acquisition year, where customer accelerated to slightly return.

an to ahead for to in as XXXX, strategic sales expect make margin we marketing the inventory In expansion increase around donations to remain of to expect additional and to a for maintaining G&A, and as revenues. XX% we to a to for positive As cost future accrual in business. soft costs international a growth we product quarter of On XXXX, drive look first-order we net increase and continue fourth due committed contribution innovation remain the our we investments plan in of implementation. percentage

profitable to growth come environment, while expansion plan through are In period our we both stronger as product With innovation manage a a the margin Q&A community sheet investments business our on. continuing innovation, our the initiatives we that, rely remain company XX% it engagement support advance sustainable questions. We Turning growth we to year across prudently XX%. and challenging as our our of business and analyst to to to we to now deep these long-term up net scale to expect the and an be growth. XXXX strategies making representing approximately as million, the to first, has fulfillment expected product session, guidance, their with today be will community off these capabilities. and EBITDA balance international and even to of factors, full to is healthy our now our our we delivering this revenues to kick us Operator XXXX result revised XXXX $XXX compared conclusion, approximately set adjusted from believe to healthcare macro committed for addressing emerge I turn be over that we We have

We will Say then through platform. answer the shareholders questions received from our Operator?

Operator

you, [Operator line Oppenheimer. Our Instructions] of one of from ma’am. Thank first Brian with questions line Nagel comes the

now is line open. Your

Brian Nagel

Good my Hi. for question. Thanks evening. taking

my So the and I updated one, guess QX. I to respect with maybe first mean, particularly question, just a simple guidance

you that that consistent for what seeing right growth, you laid with mid-single-digit So what business the is out are in now? QX,

Trina Spear

that in deceleration QX, a looking So frequency. from coming at is of half approximately decrease

is we year, lapping spending. quarter we the their initially $XXX stimulus last dollar fourth would expected believe which Our as further. year-over-year trends The by that are inflation still are our the look believe as forecast stretch an AOV reflects the which and at September we data, slightly we up with at to that And fueled do of are to of for of AOV, partially professionals looking grappling remainder also fourth the quarter and we do seeing to-date. we was healthcare quarter end related be ways in for

year-over-year. So QX reflects our lower AOV outlook slightly now for

do that do Black UPT, discount to given Cyber we be rates to Monday. at anticipating by lower offset AUR, Friday, are that planning are we expect While we higher higher

XXXX, Black we reminder, rate But Monday inventory. today what as strong discount and Cyber as built have lower what into forecast. consumer to well reflected that’s we due record Friday, our demand, low quarter are fourth a seeing As a that’s

Brian Nagel

I Got then regard your the Then few have on around of my existing those one, you of second comments a this and your there as as in response I lot are how put are price it. color is between and you part seen all question, That’s to played I questions -- actually launches price a say, some to with newer, difference promotions, compiled the around assuming maybe a muted just consumers. the have are mean, new when or response customers helpful. and place? together, you a because, customers before, made you Actually more you launches promotions you with reacting? you seeing And

Daniella Turenshine

going we to say, a take lot approach innovation together. the repeat to our seeing our still geared are be bigger So healthcare product to and over a launches that are really reminder, strong a new our love to our and integrating it’s in a Trina surveys kick and of and color seeing would have kind launch little color lift I on more we color our launches customer as telling are we we clear, are both talk purchase repeat launches, more that’s that and our and of so colors professionals but are to a big be Color is to frequency. evolve and them. driver new are about it fast the But we still insights holistic and is to for we our stories to impact going That also that our very and of coming, business, said, I style color product big learning leveraging strategy. strategy to a more driver is continue customers a being there. us color on and will that where

Trina Spear

Daniella. Thanks, Yeah.

launch out you about demand I with of rates that our think really we how down healthcare bit time. spreading our have Well, we are for. think the is professionals are we frequency launches, two trends a seeing really their are over things aligning a longer right? and that come adjusting if purchases are thing as period There’s first frequency

hit our is our really even that and of you doing Scrub Packable quickly, with Rafaela product launch our with And a very Collection, innovation. more evolving which we our holistic on Cargo sold are of our thing launch and focused Jumpsuit, Puffer. are be to strategy huge out our second The launch that is we saw

are are we helping healthcare examples leaning innovation really us, true are we functionality where our and some to many where jobs. because are them really so coming of professionals bringing aspects in these so their And into

Brian Nagel

appreciate. you. Thank I Okay.

Trina Spear

Brian. Thanks,

Operator

you Thank for your question, sir.

of of line the questioning comes Yruma next Ed Our Sandler. one Piper with line from

Your line open. is now

Ed Yruma

Hey. change Good understand little you Could down in for that click P&L out a on then the there’s taking guess, kind changed accounting guys. question, make impact Thanks a the the just little you then I first, the maybe a to bit bit a bigger more context contributions. us just of feel put of And billion for you afternoon, about bogey questions. to the impact and maybe Thank charitable how how in $X of guys an do forward? the picture going as by that environment, XXXX. you. target? I guess and current

Daniella Turenshine

accrual will So question. consistent is your our basis in Trina methodology, and we It’s the the made to time. contributions in to to over update for that more it’s second XXX And repeat be charitable expect to take we relation about points our this of future. methodology in impact an change that something don’t

Trina Spear

still we Underscrubs we a us, PRO, volatility do have relates toward be categories the incredibly macro, uncertain. international, more for but therefore, outerwear, of are So an that about, is lot front as FIGS working of and developing just recognize there Teams newer what focused But number it timing saw innovation it like including standpoint, of our to this our and relates to opportunity goal business. in product is category. the We and billion, a target, large our innovation, the themselves. quarter, see bit as growth the a of a incredible in incredibly businesses the billion From of talked I can these believe in of amount $X we product $X in you of goal

completely to our are segment asking underserved we an XXL address positioning the categories call, talked that important incredibly and and ourselves XXL are we it actually as but extended community. soft are incredibly about to we excited are on for about of we or also launching that’s new launching customers Separately, that. professionals our healthcare We are sizes,

Another growth, quarter. you area third in it of saw international, the

still the are this We early become. innings of in very what will

healthcare countries their and learning -- FIGS. XX they about how so with to are want serving are XX We in and professionals behavior much interact we

talked are our growth on deeper business. as launch haven’t lastly, are across much customize It’s as with platform now business. for evolve we our looking out sizes, stage BXB only to I around we our really DXC this really and at our strategy, have our untapped are this. business, Teams but to completely been able about extended very Our to not be is focused strategy, we our This messaging we business. really But build continuing channel. And develop Teams as impactful, really discussed, also connections our we more marketing our

So the working towards billion. $X are we

brand long the the We of focusing are run, doing development, over this what’s on the growth right for and health the the company.

to advantage moves value making are competitive and We sustainable deliver to industry-leading continue to and creation. significant create continue

Ed Yruma

much. Thanks so

Operator

sir. question, your for you Thank

next comes with Barclays. the from one of of Adrienne line line questioning Our Yih

open. is now Your line

Adrienne Yih

everybody. the Thank I you color. afternoon, get want very Good Trina, to to much. back

innovate you a sure done with have I primary and that very the You well launches driver. will am to historically color with color continue being

data do going to that and reorder, testing uptrend product be creating in to are question guess to your a use do you then I and the on that colors demand what that do how the So of warrants. you reading the is, test demand the really future, such more will

going is in Daniella, half first And it’s be the then styles. core on my that’s question. the that business for to So inventory,

Thank What this think said actions that how that in half mid think and that of other you many inventory more taken in sizing are open to line are I being with have you that sales? next line? you Are the of supply, will your you you extended canceling weeks the accommodate of orders, what reducing it, to you is portion get very divide? much. year, are On

Trina Spear

Thank you.

right? around colors, our silhouette, we our love our style, thoughtful the The being with drops, from terms we and drops, the data innovation see our look color it into color and in what point, drops. about to in tells to sales around we your launches. and it’s more leaned saw lift those the us that the customers that So really of Collection. new as utility in brought But the to strategic of innovation forward, bear. there Cargo was color continue innovation a the Cargo our We the came we products really did Collection functionality But

sell-through And an merchandise of more we messaging in I colors our color with approach terms forward. overall product that improved our across drive more opportunity and believe more saying, taking to what drive forward, shallow so effectively, line and style, holistic look drive launches am as innovation, really and going more there’s through effectively buying flywheel a sell-through we launches more in around that more to -- aspirational creating to buy shallow the

Daniella Turenshine

it everyone Adrienne, as remind as replenishment it’s relates largely driven. helpful just And think, a product is uniform to that business, I our to inventory,

Additionally, limits XX% obsolescence. core it’s so in always risk really and offering, in our stock seasonless, is our of

increased remain looking we this sooner And in at are event taking able that earlier a can expecting Cyber of been deep is roughly without during inventory kind discount Historically, terms event recall, were additionally, you expected. core we of levels. than our move have XXXX that and of we we did product and product, with a of we line to come Black some portion Monday to issues As inventory We color and the uniform. weeks chain XXXX to and non-core this experiencing. through in our expect we supply in to Friday, rate We of rate. look to on supply do brought similar our intentionally our still product our to launches inventory move discount lingering discounts this plan in due through -- XXXX,

mid-XXXX. inventory expect position better in to a be by we overall, So,

plan improve we launches, to for forward, future. us we buys are to we believe reduced our an we like product the lower of the flow making our our more enable even enhancement to in chain, Going diversification our POs product nimble for which supply will core make shallow more and future weeks us make our supply also to and in

through this strong inventory will sheet near-term navigate a business to as able challenges we a working we think the we perspective have from balance balance. move support our be these We and capital in to

Adrienne Yih

That’s Best you. Thank luck. helpful. of very

Trina Spear

Thanks, Adrienne.

Operator

Thank you for your questions, ma’am.

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

Your line now open. is

Brooke Roach

the you so where to holistic Daniella, today of was ago structure the I the about and you are looking years the year. that talk to next a my afternoon it Trina, few for taking some over Good investments of the of and versus around question. thank your course much thoughts cost make business wanted

and stock-based international investments excluding expansion. maybe and compensation talked innovation G&A corporate a little for about in expense, you product bit Specifically

about lot of are here, inflationary costs. an but taking can talk run of business like? companies We G&A how of thinking a half some or about rate the been and level tighter what XXXX you into noise, look rate maybe corporate second also look have environment the from run XXXX, us as this near-term noise a that of many are you to you at emerge might There’s cost

Daniella Turenshine

Thanks, Brooke.

and we on balancing So focused have growth always been profitability.

is a continue will this mindset that So us. for

we more feel prioritize we impacts where our certain where ROI I macro think investments the macro maximize and about uncertain look assessments. can near-term in from to into a the incorporate we more likely will really environment, return,

drive we an are and and future we item can in stage set is it. line that’s growth we profitable technology in in over where innovation, really earlier investing do long-term, us the G&A the side, product these the investments making Specifically, at for thinking are we a about how But this up automation. efficiencies, believe more but on will looking

Brooke Roach

you on you opportunity a enter about we XX% your long-term to How growth? That’s that algorithm to really Teams information little the and see as back seek helpful. be provide your you as Trina. growth thinking a a And to business? how that contributor you as follow-up maybe should that is of XXXX Can get more for bit as just important growth in near-term

Trina Spear

of for their Yeah. your scrubs mean And think it become to a I administrators so and for entire order team clinics, so their first has is could that I and entire office. build do more of incredibly hundreds, make experience We kind of we its sets that, seamless something business entire platform that really thousands department, to our exciting. their that Teams is entire order it fit so are people seamless. -- are term, can’t your two I opportunity, their uniform, out won’t business in about sizes, of entire if we the future we more or where With extended or really even another and Teams. don’t part know brand the To still a XX team into building -- shorter there the one the bigger be excited out. of it because makes

We are long This really over run. encouraged the be is going to big.

Brooke Roach

Thank you much. very

Operator

ma’am. your you questions, for Thank

Suisse. the of one Our next with line from Michael comes line of questioning Crédit Binetti

open. is line now Your

Michael Binetti

Hey, here. taking question Thanks my for guys.

heard about how on little bit I planning you as and buys And the I you on think healthcare discretionary. the points guide. you with or quarter I survey to-date, forward consumer change insights, the speak help for pulling for asking witnessed back a have margin in Within price changes can can consumer how you professionals consumer showed inform as I in a earlier, next site us the -- inventory don’t follow-up, assortment the about spring? but to fourth shifting you little this bit understand agile then, to any mentioned you more think what So your guess, approach that is the so you help conversion between be EBITDA and the demand with line a but

that freight of understand bit of can for a implied be What today the is costs? XX, that little tied you temporary year, deleverage lot of blocks less that are expectation. sales sales have you think next I to below some building or are a it’s it I sight to recapture warehousing tied a lower line to the

Daniella Turenshine

Michael. Hi,

both seeing surveys, site are are have looking really about are brand, that they our still a longer, consumer on at stretching we to bit loyal FIGS. they they still potentially So discussed, the the their we as mentioned but AOV is, What really is purchases and excited excited we so we in more seeing car spend they higher build a our with us when are driving that UPT are to that transaction. through and they and AUR. driven are customers come, their by higher really even really so out and higher lifestyle That’s we little are

adjusted the to right? we XXXX, of and and second into think, kind I are quarter EBITDA question, Looking was at expecting that your what fourth continue

Michael Binetti

Yeah. Yes.

Daniella Turenshine

Yeah.

with at margin gross the seeing is we fourth unchanged. our what that So looking outlook is are quarter,

ocean and being that’s rates offset We expected airfreight are than higher by and better promotions. seeing

than in had are that the selling quarter to This rates The third fact Turning to going a entire for that expense, be an expecting also were at are to of we X%. having wasn’t see we inventory quarter, we because these than shipped fulfillment and storage inventory. expected earlier fully cost higher that we expense anticipated. vacancy was costs additional storage

due increase Looking XXXX, promotions marketing, What accrual modestly for half expect expecting we are inventory percent are sales for expecting and G&A the increase gross for in costs. be to an the year-over-year. first looks at XX% that a impacted just of to we margin, to an implementation see above we donations to some that SOX and our do by be on like higher as

as expecting some margin the We was freight margin product to additional that sell expecting higher we the and rates. into see freight by partially the year, normalize costs rates. offset related easing are are we in half we additional shipping of more pressure are see better and storage also With seeing XXXX. selling, easing a rates the to should this gross and of from that an higher be airfreighted And and the in half first also promotions year-over-year continuation to back of get we

focus automation. to as enhancements related tech categories, to G&A, in marketing XX% continue relates the flexibility initiatives ongoing investments some as We year that profitable. well will maintain to net being our at see We on also in related deleverage fulfillment approximately expenses we and increase and we revenue to scale. as of throughout to expect new first-order to see plan we improve related discussed some particularly it as product innovation, really modest costs to to

investments we to also are are drive while efficiency continue well. our find there business, and some we to So, to increasing expect to be do in ways looking as we offsets

always, focusing profitability we really on continue and to as like continued scale. on So, both growth

Michael Binetti

guys. Thanks a lot,

Operator

Michael. you your Thank questions, for

from James. with next Our comes of one the line Rick line Raymond of questions Patel

Your is now open. line

Rick Patel

to Good dig drive the products, for scrubs, just most see conviction penetration Thank right I what’s hoping working, not scale? there that the segment replenishment the was and deeper about you lifestyle And do have maybe of everyone. where what you forward? the going is talk business you. afternoon, slowdown could you of given what’s in on

Daniella Turenshine

Thanks, Rick.

So, our products. purchased have our of lifestyle active approximately XX% customers

XX%, oh, incredibly pleased are with of the almost year-over-year, it’s sales. sorry, XX% growth We of our XX%

build continue outerwear our that that to about is The driving out. really So we are three to really excited this how are we going categories are business.

is Puffer Packable amazing. Our pretty

So I that I were would you. if check out,

everything Balance just New as sleeve, our over it continues to our growth and And to pant. Balance, top scrub an driver the be lifestyle. and to our isn’t scrubs your New leggings Underscrub, you with time. bras, are footwear Our underneath and kind It’s scrub, that relates under our looking long wearing incredible from Underscrubs your out so of sports build underneath that collaboration finally, really

of scrubs of other the but about excited become our kind not that categories also offering. areas business, our a of part are our the system So lot of those only lifestyle launched will that focus. even incredibly haven’t we There’s of future are so layering and we

Rick Patel

trend? airfreight you year-to-date curious when and also mix you in the to of the back also compares us think the ocean can I of how into can that fourth And freight we be versus tell more normalized just what will leaning quarter, ocean to freight XXXX? a as get about cadence am

Daniella Turenshine

in we have as an the So seen chain. easing supply

margin that fourth some forecasting are it in gross better relates as We see and to quarter we will forecasted in rates. airfreight ocean benefit the than

benefit decrease expect We a also utilization year-over-year. from and rates in to airfreight lower in a see year-over-year

around airfreight million. quarter are be forecasting $X So expense for the we fourth to

seeing are some benefits there. we So

a now, are looking that normalization continue think, next normalized more I we yeah, into expect So, year. place and getting into we to

But that a for are the brought in, going we receipts as As be amount using are sell that XXXX. we incurring of the we minimizing we through forward. products really reminder, we some will XXXX into airfreight in airfreight

Rick Patel

the All this you. Thank best holiday.

Daniella Turenshine

Thank you.

Trina Spear

you. Thank

Operator

Thank for your question, you sir.

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

is line now Your open.

Lorraine Hutchinson

Good afternoon. Thanks.

You spoke inventory by the lot a right-sizing about middle XXXX. the of

would line reaccelerate bit they are you trends you levers that a light you will little it earlier? can first shed can of you pull growth in there -- that planning with expect to to half forecasting sales, be current on part As are how some or process,

Daniella Turenshine

inventory. be of but are XXXX talk what are we We improve too and to a providing due But little quarter. macro the a about as particularly we year. well half, guidance, we about light do what for next to might seeing environment, first move us first as macro, challenging to in efforts through for thinking quarter to So fourth are our expect a from the assume, the trends it’s current in expecting will soon little we as you

in we is say see more year Going easier drive lapping are comps. the our quarter would we to the business of next year, to expect while would more strength a continuing are into as we of fourth the forward. I back the of macro headwind,

We deeper are and to dive really continuing executing just international non-scrubwear, continuing to out build on with our communities. deep also building our connections

But provide that’s information what So detailed on are our more we call. will next seeing XXXX we on today.

Lorraine Hutchinson

you. Thank

Operator

questions. your for you Thank

one Morgan comes questioning of line Lauren with of Schenk next Stanley. line Our the from

is line Your now open.

Lauren Schenk

just of Great. the increased is AOV? out a if of want it to frequency and third just not ones, worse? churn gotten of help October clarify I Second, could seeing sort promotional points any you. is I or similar can. customers versus Thank and quarter? in the there existing has that shifts you Thanks. product is parse October XXX that the freight second mix in Maybe then basis half Are you any the quick way to few in modeling then October the really And

Daniella Turenshine

your at and seeing about think what in first I cohorts. looking churn So question, was our we are which

a remained have seen cohorts older cohorts, in newer our churn have We while increase among stable. modest

We of number quarter. reactivations Some of the in third saw in is up a are customers reactivation. that showing record

more not layering as we spend deliver frequency, that of churn but continuing brand. back us portion less in is our XX, XX newness are coming a professionals the also buying So to with XX, They in month leaving system. healthcare and

So numbers, really expansion driving look and as lot through sizing at through increased improved future. doing as lifestyle offering, at we a our we of fit, customers so there’s we are look our on that we with focused these churn engagement the and personalization are the for

really second your around quickly? it just think, was question, -- For can you I repeat it actually

Lauren Schenk

Yeah.

third basis margin, points XXX is quarter, just much the freight versus gross mix? on product promotional versus Just how of the

Daniella Turenshine

rate XXX year-over-year, margin. basis had impact gross a So points negative freight on

product sales looking of the not up. the The to mix in offset unfavorable And given components trends, and are a then at of and quarter-to-date driving returns, we speaking was there supply waiting shift bit margin we that better to an from purchase chain October, saw but promotions environment of mix kind little balance year. deleverage as other are gross we to really seeing reflect our to overall, forecast customers to not we what we seeing the October trends are so the continuing speaking saw month-over-month. we But the opposed specifically of are year does last and through

Lauren Schenk

you. Thank Okay.

Operator

questions, Thank you your for ma’am.

one with questioning of Our of Guggenheim. line next comes Drbul the from line Bob

is line now Your open.

Bob Drbul

expected? the bit a the expand color a international, bit better -- segment, the about apparel than you on more markets you competitive evening. little which seeing what any talk you but Thanks. healthcare Good have like, Can early can for worse seeing competitively? then you the you or And are I little landscape, market on performed or are really it’s know on consumers on Hi. if

Trina Spear

Sure.

change So we from not standpoint, from seeing competitive really perspective. the are a much

have set our is still but as their is don’t to are and share size. on deliver continuing -- a not And serve and gain community. apart to apart, We price, continue are the to same, ourselves ourselves about compete set competitor to so quality just closest we else the everyone remember relates we single think thing and to perspective of next try to from every right? continuing this it we remember customers price from quality. we bring I They product Most lower market and DTC our one-tenth

of are relates to we Canada seen to super of encouraged healthcare really U.K. it by focus really XX% brand. the As and and the a international, just huge lot coming ours. professionals growth, year-over-year have been a we are

were we countries other we bigger growth entered. that countries We that as really a drive way seen newer in have those have two building the up

do and we And to what about so couldn’t excited there. international I continue more be will

We localizing experience. the are

translations. bringing are We

a each really as serve are efforts global we are marketing health we entire community. with localized truly become to country excited We the brand, targeting so and global care

Bob Drbul

you very Thank Great. much.

Operator

for sir. you your question, Thank

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

Your line is open. now

Dana Telsey

everyone. afternoon, Good Hi.

you As to rid you you making, you get what allocated fulfillment levels, is are L.A. what how of the see an inventory? specific how Thank you see period the we I that just How like on that, then you should disposing sometimes you. some to enhancements seek do I -- over time you have have to going the in that? you what cost adjust of there do And and second, have channels to and through? And follow-up. the see inventory. a inventory inventory know done reduce event things on a see are

Daniella Turenshine

looking our through historical XXXX, we different inventory levels. meaningfully like that at So rate rate do to looks can be don’t inventory, XXXX this really than expect we discount at a discount our levels. move We think

channels inventory. through and to move events multiple which have We

So we up. have our Black that’s Cyber event Friday, coming

at business. through more come back an time. customers through Evergreen and drive and launch any BXB our on sales this website move to non-launch planning between purchase to launch are performance can days or feature will similarly to their also consistent enable colors inventory to We just favorite and our sales tab also prior Amazon We our section

are determining evaluating repeat you the see. colors way second your you, they the So excited are am can to sorry, to with and that really the and Can channels it best we all are customer I meet where our of they approach question?

Dana Telsey

about making want, either -- a as that it? complete margin cost you that, enhancements part to some are there implement away or is What of Fulfillment, the part to that’s of transitory and doing to goes you margin that’s you what timeframe you your fulfillment. talked permanent what’s the structure and after

Daniella Turenshine

in on process are evaluating kind of this So really right now. the we fulfillment, of

ensure experience our customers. provide to fulsome efficiency call. So we we that best can to update But to will be looking more giving our to improve the a to we next continue on drive really more flexibility, are and to build

expecting think an the that higher come on for do time. rate. don’t the thing this to our best next we it’s at are to We We today. a business have do the planning are update But we call. over specifics But

Dana Telsey

talent, marketing. Any forward? at or that the Trina, And just that have then, they or are how them Okay. updates in they to new merchandising processes it’s and some with in you to ball lastly, whether added bringing that opportunity working foresee, the look in you move the order

Trina Spear

and this is our really I be background brings and is something creative, but over Marketing brand appropriate has a to And in think we Intuit, really exciting. this knowledge us. couldn’t joining are We him actively channel only the so with Yeah. building an on not our we opportunity excited Sunil mean, the and are time lot really engagement today future. be really see is that recently digital a from about brought community deep what also I He know-how, we Kaki on align as more the And Officer. in going about more larger capitalize comes Amazon, Chief audience. extensive couldn’t us and you and excited to our and appropriate align of background implementing from Beachbody messaging

Dana Telsey

you. Thank

Operator

your for you Thank ma’am. questions,

one the last Our John with question comes Cowen. from of line Kernan

Your line is now open.

John Kernan

Thanks. Great.

Just should about order year? QX how that we go and of the to get in to was and on pretty through -- were it to selling quarter. per Any back significantly up think specific points the third looked fulfillment as selling like expenses into related expense distribution, some dynamics wanted we and next

Daniella Turenshine

higher was third quarter in costs our because fulfillment for of expense So additional inventory. storage the these

vacancy at said, earlier X%. As than we were than planned inventory and storage less shift rates

to So more inventory. it this anticipated than was store costly

so have the additional of half are first continue pressured. a into we will storage see pressure the of fourth some full to quarter And quarter, looking expecting Looking XXXX, would from we remain costs line and these this item. probably to additional we to expect that into

John Kernan

Thanks. Understood.

sheet, get about more turn, we turn $XXX it’s question, basis cost little the into inventory. million time. the we and do a back balance about a we over XXX% If inventory as about Just X inventory year-over-year. the next on How DSOs on think on up year? into It’s one

Daniella Turenshine

a position So are a on expecting and a inventory to we by day’s perspective. turn be better mid-XXXX in

our As product a largely driven, replenishment a it’s reminder, is uniform.

always It’s We traditional community. we expect make our we to have apparel want to sure healthcare inventory company. that this we would serve product. So in in a higher stock, always days style than and have can

than to But we better So we apparel looking to that actively a down be we expect it company. expecting be are are are by we would in position mid-XXXX. and higher updates -- traditional making to bring a

John Kernan

Understood. Best of luck. Thank you.

Trina Spear

Thank you.

Operator

your Thank sir. you for questions,

Trina Spear

Okay.

So I think we got -- okay.

job glad think a And falsies we am I it’s got topic are and years, we I SPI. three a single court trial, in that lies profound last the the with that our of favor really questions is weeks Heather the growing this much that think it about our So we found the revolutionized it a truth wrong. and I platform. called as where stopping of SPI community. has a few blinders that, finally the of us justice addressing Hasson experience say stems platform it’s the about jury just And -- Say integrity I our spreading I up litigation and -- the community every serving recent personally, last on on that out. nothing we years, also wanted And what my just through I They shareholder I this But FIGS four spent us around and proud our finally good have few four in and four found was from as Court think through really really But over the our we to personally. after years, painful myself how just not last Federal and we a day done to three a lot around -- the over came putting has this served. over address Co-Founder, noise are in how showed business, key came weeks, FIGS on industry our have years showed to am feeling on that. company been a company last the from focusing were was, focusing am after it’s really issue. unanimously here. And -- did

to you up serve us. that’s our so we joining industry to going up wake to show quarter Thank we continue to you do. single are We what with going That again and all look for are the joining and Thank to why healthcare revolutionize change call and and to speaking continue soon. you game all day forward every the is third for professionals. for we

Operator

third conference And with participation. will that, XXXX we FIGS call. earnings conclude fiscal Thank your quarter for you today’s

FIGS (FIGS) 11 Nov 222022 Q3 Earnings call transcript