FIGS - Earnings call 4 2023

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

Operator

Good afternoon. Thank you for attending today's FIGS Fourth Quarter and Fiscal 2023 Year Earnings Conference Call. My name is Cole, and I'll be the moderator for today's call. [Operator Instructions] I'd now like to turn the conference over to our host, Jean Fontana. Please go ahead.

Jean Fontana

you. Thank thank and today's full and FIGS to for quarter fourth year you afternoon, call joining discuss Good XXXX results. this release stockholder released our ir.wearfigs.com. Investor we afternoon be at can which found Relations earnings website press posted and presentation the in to our and in

Officer; today's on Executive Trina Turenshine, our Co-Founder and Spear, Presenting Daniella our Chief are Chief call and Financial Officer.

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

uncertainties, involve risks actual statements materially. Forward-looking differ and and results could

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

non-GAAP and Finally, performance reconciliations measures understanding we issued our key business. useful the today. comparable stockholder included indicators, presentation in which these to non-GAAP discuss and supplemental certain believe are GAAP measures for measures will definitions are their most metrics we of

turn call Now like to the I Spear. over to would Trina

Catherine Spear

you, Jean. Thank

Looking margin by growth million. XX.X%. adjusted XXXX, and of reduced net EBITDA flow back with strong revenue X% we outperformed our inventory free generated XX% at $XX and We cash of expectations of

across business, year. our we active grew customer Looking the last base XX% versus

our XX% business. in we in in our growth Additionally, teams business growth international nearly XX% nonscrubs, net growth achieved and XX% revenue

and with permanent first early our opened our traffic hub Los also location, conversion. strong We community in reads in retail Angeles

technology. our infrastructure the to with continue scale investments and lay we Importantly, business to in groundwork

in to detail I trends up that have my share will fervent are right shortly. accomplishments, But we While speak more become recent course. want the these challenging on of right we position front I are which more to proud

rightsize to which some effects. to after measures are took levels our inventory leading we XXXX, During

scale the underway set a future. numerous foundation up to to work more operations in will opportunistically from succeed care However, to the invest in apparel balance distant us marketing leader to create have to sheet have health across solid and We the levers. the remain we product growth and

in Now on outlook. context bit our deeper XXXX revenue provide diving net a to

factors respect we the With apparel impacting are care health two environment, macro are industry. believe that there to the

to First, power consumers, X/X X than of care continue did see less and inflation we our than have $XXX,XXX about health they every spending on are make including year. weigh how dollar. whom They years spend community, they more a intentional being ago, less

may traumatic purchasing that care the believe our demand we on sustained post-COVID experience stress behavior. may decisions. be impacting and toll professionals impacting COVID the their Second, followed of The its is health taking for be fatigue and by workers care health amongst community high sustained

pressure we health engagement just metrics. light much believe discussion November, be Our this a how signed under. human seeing we on reflected this may And care past is roundtable they're through lower

We with our these in bill. them trenches through solve Awesome are Humans the diligently challenges working are help and to our community on

and health of remain social workforce that any the of that sector fastest term. assistance the long over external given of period. challenges, gains optimistic This create care according growing projected all are estimated about job XXXX, to these about are we be XX% particularly and Bureau the health state Despite to jobs projected to Statistics. of between is XXXX and Labor the care

a also showed back plans this of our care. macro a Z were assess one supply modest Outside successful recent of only year-end. our Maryland, impact our did Baltimore margin. approximately Gen to We a of in XX to to performance. XX% of from part we've by back the levels gross back a by number on by taken goal products We inventory that pursue factors, reduce to prior meeting launches. our of was of XXXX, health bringing in a priorities weeks with career addition, own step In these survey University top In in

For in conversion-driven FIGS inventory. and including move seeing. example, relaunched weeks. through our we believe the iconic colors we're XX contributed trends lower We communities XX to leveraged marketing, may also times, promotional At messaging our campaign, customer through to have XX we of our active this frequency favorite now

cohesive Looking that storytelling back, our got from launches brand product we away think to campaigns. we strategy ties powerful the building

based brand been excitement on flywheel. has ignites success word-of-mouth that a Our

number our a fundamentally brand when will our FIGS through focus clicking. at it's initiatives. momentum This XXXX, leveling and different, and flywheel be up is our rebuilding In best what of innovation makes we're on

we to continents care through As supply are quarter, discussed our chain deliver advanced the products most professionals. across evolving last health best-in-class partners to

new quality and like zippers, In important and trends, bands, waste innovation addition our we details fabrications. products, are enhancing to our

We roll excited to as embarked over improve also to initiative assortment, an are have out across next consistency our which on fit year, starting early we as QX. the

of into address much great XX% Jacket revenue our opportunity further is the by health ahead and care footwear, these layering biggest we're advance to able Bomber the a what fourth bags performance of to categories, outerwear, of to for care of so lean brand, a of more reflecting core Nonscrubs outside to see On-Shift also scrubware, see we capabilities, As becoming professionals one example and in strong The technical the we shift our to our needs in professionals. was compression on quarter, meaningful scrubs socks, off. bring the to health of number recent and us. Sherpa of our across of system category-defining market and we date net underscrubs, runway launch continue represented

how exciting marketing This level, series for take needs team featuring medical innovation we the extraordinary next can Director One. serve of the month, supporting are campaign even an Hintsa, professionals. most a product technical to by launches most we fields we introducing featuring specialized exemplifies we things Bennett, the to products health innovative our Performance solve for launched the Extremes. medicine. of Dr. care as collection to problems Formula Extremes Luke designed plan first the some supported within our of Medical Extremes introduce Last Lastly, year,

be designed large-scale to day, only extraordinary health health storytelling professionals every work also extreme do are. campaigns the that Our care a spotlight on these all on not but just care shine professionals will how

series and a partnerships well their been and the has product of us medicine that brand campaigns will It's with areas year professionals have within and sports of experience augmented as We launch series These powerful exciting be and care large search professionals evergreen care great engage and smaller leading activations a one to of not throughout The events innovation person. as vets FIGS other moments marketing. and about seamless big product generates including well, excitement, community integration health animal just in as to health another. of with will the of rescue, success brand enable care our that brand health share both EMT.

for We Nike's years rebuilding joined $X.X is bringing integral Head New our Marketing XXXX, billion our our believe us in Officer, Marketing dynamics recently inception. to as FIGS City. York years that To experience, Extreme's Bené just word-of-mouth of XX the lead after surpass of as most initiative powerful XX integrated Brand in Eaton has Chief strategy, that helped marketing

as Armour. success look sauce marketing Ralph that the Lauren her we to last to includes driven lead andunder our brand the for and secret her back decade. having addition forward work our has In to We efforts over background get Nike, digital

time While strategic take facing existing know care environment momentum, will to that we're in which guidance. professionals health initiatives drive of an building headwinds excited and engagement about reflected our our our brand new in we customer the is

the to with entered levers. prior driven localization strong markets established we're health The efforts evolving, we're the our versus in it markets, targeting international. XX Starting evolve growth grew multiple care in by in performance steps year leveraging and XX% industry as is our from was Net XXXX well also while in XXXX. taking and revenue more with gaining same as The period. initiatives we traction stemming growth

to you Mexico our marketing build markets. plan remain continue as came minimal new add as recall, we brand with our in and new this We markets investment. the to may XXXX globally. Philippines And top

are Starting League, used Club of is league excited which Everton world. Premier the sports company's time share is the the partnering our first with that also with most to FIGS in medical English the Football sport. history, behind the We for in team

Our lives to demonstrates their have Everton's our others, team serving medical professionals care relationship commitment athletes. dedicated with who to celebrating including health

enhance Finally, the shorter believe growing customer center which in and our with distribution open improve international support of business, plan a we experience XXXX, in in margin our meaningfully time. shipping will to Canada we

growth in scrub to platform, Our access by successfully test, quarter. revenue app any teams size which XX% purchase the our enabling to of businesses fourth last grew business our as strong open Teams We to net contributed through year. launched compared the quarter

increases believe this our of that any to our ability size meaningfully addressable businesses market. through We serve platform

embroidery. serving In premium including addition these with to personalization, customers offer we products, also

experience. holiday customized opportunity business During a season, become grow the health offer specialized, digital more personalized nurse we experience largest employees. our a to exceptional evolving localized, to gifting teams and and customer, see experience their care a through agency to online travel to assortment created With we tremendous for an this expanded

to M&A U.S. expand to trends primary concierge space. record in our to clinics These expected activity is reflected XXXX. in the efforts the billion growth concierge within team's double see market membership business. increased $XX.X this medicine and by amongst our The care We validate

Turning to retail.

only the with opening of as United results that in community in-person sales early want our experience the in fact in shopping our pleased first e-commerce that the comprised that consumers since November. total We early by still are believe retail States. We hub XXXX, of XX.X% evidenced

requests new enabling the while serve Our from Century received us community shopping store customers in market. their we've brand an existing City, channel. in numerous to attracting a open opening hub Since health with additional to is customers professionals also care to

programming brand to The advocacy align To a second deliver broader very for to enable us and we exceptional location a proud We that foot X,XXX our will better experience can higher shopping summer an enable to us are $X.X community of presenting something our in drive we across community deliver layering events we're system, multiple efforts. exceed showcase believe and format square as The billion pillars an AOV. also and Philadelphia. targeting opportunity channels. digital-only opening is with that hub store will large our

learn, Our community hub apply win. test, strategy rollout and remain, will

scale. foundation are laying we to finally, the And

best-in-class and the later experience. undergoing transition customer fulfillment provide our will enable launch we us operation to of a this year a to that facility are tech-enabled We will better scale

offset are have In headwinds creating dynamics to recognize for pressure, industry conclusion, we but we will steps continue growth. these and some long-term and that take to near-term ourselves position been

in valuable way and takes way it. brand building unwavering belief are a the time, authentic to our the most it's right We do that but

to steps We us opportunities make future. more in important capitalize the the of are on positioning while our us company in company to a front stronger, taking resilient

on We remain opportunity our several for long-term bullish reasons.

the We space. are million care how pinnacle hit most have in we brand on brand We've health just the the the industry. loved Instagram, apparel in showing followers X

We geographies, ample share have market channels and across professions. opportunity

a long-term health have We industry tailwinds. care

million investments. We sheet have cash a balance with short-term in strong and $XXX

be I we flow strategies and long-term sustainable debt, we underway growth. healthy that to no confident generative have continue lead We the remain to a will business. cash have

announcement Now I over the us serves grateful to to her revenue brand been at as care health acknowledge being build to the years. I and an best had want X.X the company. helped role profitable. over leave built who team she am leading to those to has us our another big serve FIGS to Turenshine's Daniella has finance a contributions others. of best take Daniella community, incredible $X.X assume that family. decision also has a last to CFO She leader while moment whole so partner billion for and me, of and the out backs the the she also net thought in related the

smooth in mid-April as a X We serve interim to been Kevin Controller, his our Corporate years transition. has Fosty, CFO. us to and Daniella family the part have of are for every ability through have fortunate with FIGS to confidence last our the we ensure

our on will I to over year for details XXXX. to that, the full With quarter outlook Daniella results and fourth and our call turn provide

Daniella Turenshine

am time years. opportunity I My ahead. an of been I Trina. believe the that accomplished much journey. FIGS at so proud last you, there part have so so this grateful to over Thank several have we is incredible truly experience, and has and what been I'm of growth

exceeded year the and a adjusted confidence XXXX. Our our We that full to some of the and turn have for review of a Kevin's our best quarter leadership. I XXXX. to every financial I and the followed quarter finance my will comprised were will team of now pleased our results, have discussion transition under by outlook have expectations EBITDA fourth for first is brightest, we margin seamless

current and are drive remain outlook, more into of improved As in we leaning focused macro the consider and XXXX future. to on brand mindful performance we the our DNA our challenges consistent

to Importantly, to balance strong a our business make we have sound in growth. sheet drive sustainable investments long-term

our press an that account. noted on release, net revenue been selling million with a subsidies our we our contra accounting have fourth quarter in expense a for duty As paying customers. reclassification reflects to associated This was Canadian change revenue behalf of from $X.X

Now our top results. the turning line. to Beginning with

a revenue XX-month not For the low quarter reclassification last in were of year. growth revenues net duty $XXX.X growth. guidance XX% record customer last negatively aforementioned single-digit compared for QX. increased fourth customers to the was by revenues QX in million. This year's reclassification new net Active quarter, period million, to net The $X.X QX impacted of flat our reflected

that performance third sale pull of demand strong into would sample reminder, our quarter. forward As anticipated a some we the the

increased $XXX compared months Unit AOV $XXX. for net per customer in XX.X% higher lower mix. basis impact Gross net was quarter, Retail revenues and fourth the from improved offset to to active due the partially QX more XXXX. X.X% revenues of to AUR Gross benefited in product gross a margin X% trailing XXX mix. to by XX costs mix, by by margin Average product utilization, decreased impacted QX freight ocean driven or negatively reclassification The XX.X% promotional favorable airfreight margin points.

revenues million, fees. labor compared to QX fulfillment associated well as due decrease storage in XX% lower expense net Selling $XX.X primarily XX.X% and representing shipping XXXX. within basis of point QX to was XXX The was for warehouse improved as domestic costs

The net longer QX reminder, the is in expense be marketing million includes of marketing, $XX.X Selling XX.X% to subsidies a QX revenues representing expense lower to for no largely XX.X% million, was in compared including out-of-home. As percentage due decline in XXXX. reclassified. a $X.X expense sales brand as duty of Marketing

We acquisition efficiencies profitability. order to maintaining both customer marketing drive first continue spend and new on retention, and

to insurance G&A revenues in largely The $XX.X QX by XXXX. expense to of partially in G&A million, was as people. a offset due for lower QX sales XX.X% was net investments decrease XX.X% legal percentage and of costs, in compared representing fees

in $X.X compared fourth Our net million diluted net of to $XX or $X.XX last was quarter. million income $X.XX income quarter or as diluted in EPS of EPS year's fourth

higher the an adjusted XXXX. margin of our a of offset strong adjusted margin million, QX $XXX.X to partially $XX.X higher Finally, remained an shift at utilization XX.X% product were due Gross for EBITDA and to basis and a and freight X.X% year. compared million in XX.X%, of ocean year-over-year lesser was for mix decrease EBITDA extent, lower to XXX XX.X% full points revenues QX mix sales, by duties a year-over-year. rates. airfreight promotional increase Briefly touching on Net of

primarily and and the administrative expenses, due from As by year, prior marketing revenues, a increased selling higher in to to expense. lower expenses percentage offset XX.X% of slightly net operating XX.X% general

margin cash in same limited compared year. finished and target of of with Touching balance as Overall, of the last reaching XX.X% of the to cash of supply XX.X% investments comfortable equivalents supply was back the We EBITDA and and believe XXXX. and the decreased balance our of be levels weeks quarter are XX% $XXX sheet. Inventory edition core end quarter, year-end. will weeks $XXX.X to our we in million. to period we approximately the for fourth normalized XX at inventory on million with short-term Adjusted

the associated of fulfillment Capital million million, enhancement project. year $XX.X which the expenditures for with totaled is $XX.X

in Trina our comments our to guidance, some business. regards reiterate turning to discussed want I impacting to factors of Before the

macro such believe fatigue among as be term. the rising will industry. pressure inflation exacerbated to the could care health this we believe professionals in continue challenges First, and near workers in some We the stress by

Looking at our business. own

though have believe far to actions improved reflected We shifted XXXX, we recognize will levels, product in the which getting approach and outlook. storytelling we During tying campaigns. we launches take believe too time, away down will may of from brand that in on drive performance, that marketing strategic our as product focus inventory normalized we to more ultimately is taking our a bit are this we

at profitability. Looking

expense in associated project G&A We enhancement selling margin fulfillment deleverage adjusted XXXX. to our with pressure on expect EBITDA and pressure

We flow strategic make confident dynamics are in us will therefore, steps position future are to the taking performance. cash we that our investments we continue sheet and drive plan And business to improved balance for leverage growth. to strong scale our to to

for XXXX. guidance year to full moving Now the

mid-single the to the flat active in of expect down pressure digits customer result XXXX, frequency a aforementioned be factors, reflecting to we as and revenues net year to compared trends full As growth.

cadence. at Looking

be work the anniversary volume most last generated we expect levels. challenged the we year's sample down by quarter third We sale the strong as of as the year to to inventory continue

for margin gross to Turning year. the

We expect mix to our and in to with with XXXX and roughly rate trends as we product products fabrications shift. new see be continue elevate line

expect a cost benefit be later XXXX. to We this offset duty by in

to associated are project, to basis be approximately enhancement Turning or million costs expense. about in $XX points with Transitory fulfillment XXXX. our selling estimated XXX

gain expense selling Longer baseline center. for percentage ongoing terms fulfillment offset represents leverage the the fulfillment-related Therefore, we of with excess that to we be as associated we house will our costs, transition XXXX sales of new our what to completion the following gained storage savings inventory year. as to new we last expect scale. on term, facility costs of a a to expect cost good we In the expect

ensure transition. XXXX in The carrying facility quarter The moving costs we running costs spread of million highest majority in first expect a to involves within the project fulfillment transitory our the these are smooth continuing largely second be the will quarters, projected in the temporarily current In two our while simultaneously to transitory associated cadence, with of $XX new bulk with of terms facility the concurrently. X the operations expense. a

The new as operate that new well we order expect flexibility efficiency will delivery technology improved facility with increase to robotics and state-of-the-art as reliability, and times.

facility based the to addition, as net our in to is our capacity have revenues $X In expect continue business. this scale revenue we new outlook. deleverage support we expected G&A to billion to on net

drive taking business a opportunities, cost continue we'll at in of look identify growth. our are but savings areas that close structure to invest We the to our

with the expect commensurate expenditures. to We increase in D&A increase capital

full As to a XX% approximately factors, these cost basis EBITDA expected adjusted of This be XXXX between project. and XX%. of year transitory margin is fulfillment result of reflects portion points our from XXX the for headwind

In terms digits revenues single net and to continuation customer XXXX in we of our reflecting active low slower decline QX pressure frequency on outlook, the trends. expect growth of

to gross expect in shift. to be due investments margin and innovation mix year QX We last down product versus

Looking operating expenses. at

points. For also duty transitory selling to benefit XX QX be fulfillment expense, this higher costs. we Offsetting fees Net-net, reclassification. expect impact fulfillment year well the as by cost project expect basis deleverage by will cost approximately we approximately takes points basis ongoing selling savings from nonrecurring which to last XXX the of the storage expense as the from into account

$XX million between a margin $XX to adjusted EBITDA $XX first XXXX we to in expected to and million, costs. including be X.X%. As for approximately Capital related $XX expenditures expect are enhancement million quarter fulfillment million result, be

facing to We will this demand remain time, we we macro but reignite excited business. for are the headwinds. of recognize identified we areas prospects also business, conclusion, about opportunity long-term our our take In in that have still believe and

love, invest distant with the and coupled future in sheet in with balance and are to health distinct advantages product scale innovation growth. competitive the brand in We apparel care leader

our turn Q&A I it to With Operator? over the will to off operator session. that, kick

Operator

with question [Operator Brian Nagel Instructions] from first Oppenheimer. Our is

Brian Nagel

clear guess this. to first we're have, I on Daniella, I So make question just the sure

said temporarily the year? EBITDA We XXXX? that that's EBITDA that margin -- XX% suppressing 'XX for factors are guidance margins So is there in Or other the basis reflects this guidance XXX abnormal EBITDA points Is to transitory year cost. are for XX%. the next all

Daniella Turenshine

the for Brian. Thanks question,

of XX.X%. our transitory for So XX%, once you XX% you to to XXX selling of basis expenses, outlook XX.X% gets to points XXXX the EBITDA adjust

the think the is other outlook impacting revenue is the thing I that guidance.

short-term So some expecting we in to are expenses. see deleverage G&A

at as I still for future, pretty adjusted high well. the margin think EBITDA into in our we really close to looking believe target a teens that is XXXX showed business. And we're almost XX% think we I good that that target a

yes, super so we of proud performance And delivered. the

Brian Nagel

it. Got

with second and I my guidance Then the respect consumer. Okay. question, guess, what with the to, revenue you're just seeing

are articulated that So here? you the very into here that started more to the Is you progress -- leader the as that And recognizing that question seeing out it is Have as have is you XXXX? more we a backdrop I are you challenged in would that fragmented well. second seen you're space. very, something then trained, with there

simply indications seeing you or consumers activity consumers? target something at away of from another all any is part on that are weaker bigs your are for trading Or core reason But this else? your one it to the

Daniella Turenshine

Well, we're in terms first part of I'll XXXX. the what seeing take in

schedule So I a have year-over-year, we've the different we said think in past, for launches. events, for like

And very compare to us so hard for apples-to-apples. it's

that However, inform continued terms year-to-date we're utilizing active in to rates, our of on information in the we're outlook. also pressure frequency our pressure have the growth that outlook to customer we but trends on speaking

how information. And encompassing so we're that that's

over it pass second about to talk question your Trina to I'll And

Catherine Spear

Thanks, Yes. Brian.

has uncertain really economic XXXX I COVID-XX for the base with think broadly when majority is customer more So since what slowed that consumer landscape since our we're the -- then. seeing the of has felt was

base. than make have how our of more $XXX,XXX less our ago they intentional every they X/X about and impacting they years been really did dollar. X are has inflation a spend than being So power less year, and customers spending

where have and care to health imbalance, sustained demand being on being and shortage is more staffing asked more the do that care continue is The large on segment, this health of part question but are bankruptcy. demand a related going filed And than are we're by that. seeing care There in and apparel to less what they community not that premium really much to for high taking it's an them. your around supply incredibly we've grow, toll really put player the term, and that's is they had just Long do more to the to a past. has second down, a impact seeing. care community a seen the -- health strong SPI to name of health trading the are professionals it's industry we the in very

we do is isn't So product specific. overall help don't this felt staying we by brand innovation, think to long -- our I is and staying true industry. our us this We advocacy -- that And really true our really the think being term. storytelling to what who we are, will win authenticity,

Operator

Our Edward next Sandler. Piper Yruma question is with from

Edward Yruma

know some cases I number of use you you comments a medical the listed back first, guess, your to more to curious were, see. of pockets link just specialized different on of incremental but of demand kind that I for

second, there I kind calendar that So expectation promotions to you've that And were based is lower medium-term today? it comfort inventory aligned kind guess, seen as than love broadly it view now would in these just of they you've promotional that in offering 'XX? kind what through of the gives the more the niche what then is be the gotten on should applications? system? more Is you of product I think layering

Catherine Spear

Thanks, Ed. Sure.

past. number of XXXX, number So a styles We perspective, but I in had were think back also from and product bringing a a the of colors we launches, from different

proud of look terms are we in less $XXX net-net, QX. there to peak we in $XXX you ability year, of the less the bringing of in there million where of at innovation the of down was now. was And terms inventory did cadence what of our a newness, from million if we're so And very

healthy on scrubs in And in socks, ability outerwear Bomber are a the example our the in up innovation professional I was Jacket. our On-Shift our product? and across launches and this, underscrubs, supply. And about features needs product this functionality coats of of compression very stepping our to business, these XXXX. really weeks fabrications, care nonscrubs. with mentioned includes so footwear, categories, and of all of and lab on leveling It We now good all outerwear best we We both since have good mind. A is where Sherpa feel introduce one it, health really of up new

was our a success. Our launch scrubs like ScrubLegging huge

but So QX, we're engagement not dry but professionals health to to time. will innovation we the flywheel are bring them but know care of that And we new energized by has particular what that we've that's us engaged also continue the to with we core. building seen in to that level successful. drives any only really going had take made drives so launch, that the

of , want the In terms promotional Daniella that calendar, one? do you to take

Daniella Turenshine

Yes. really margin in that the delivered so inventory we think I the for it's elevated despite really for XXXX, terms rate think year. that strong maintain XXXX, note gross full promotional apparent an in cadence in balance, discipline that's of promotional we having to important around our I events. And

into looking our continue assumes guidance our that next same to so discipline And promotional events. around we year, that maintain

every As like-for-like quarter. do you don't events we know,

that for we our the think that's customer And so really to ensure next event. isn't important waiting

our be going I under Trina as on fact pressure. the really focused also in to environment brand, we're protecting of that but mindful really the a to think macro we're discussed, we're where, consumer continue is challenging

So I similar promotional a think balance we're all things those to have to going expect in XXXX. and cadence of relatively

Operator

with Brooke Goldman Roach Our is next Sachs. from question

Brooke Roach

pressure was the more some Revenues could under talk looks is plans your like the the about for about percent fourth quarter. are engaging a marketing and and you've this the of little had percent bit efficiencies your as hoping differently. advertising a customer in XXXX? we and I changing a year. It Can sales absolute of customer talk acquisition in planned what's you marketing costs marketing On spend in bit year? costs

Catherine Spear

Brooke. Sure. Thanks,

So I excited about first reiterate how Dineen us we CMO. want as to our are new off, joining

our shift and long to is and the our making campaigns in success community our marketing merchandising FIGS. at why funnel. is going product, driven to with together It community cohesive our currently we're top our very over our intentional run. important be loves what think of is I a tie the that lens super It the really has having brand and engaging

so until we new seeing community, And waiting around strategy up about is midnight that the launching it. And how what they're products, think engaging I launched. our think we

They're be that continues the behind that that of and That the merchandising think is we core, marketing. none about engaging how with replenishing changing. to product then

also In quarter remain been net XX%, of XX international, of as revenue, percent and and been a spend we stable. you in across but opportunities and Quarter incredibly potentially that the where investment, return are after can long-term is ways we're we've It's CAC, on LTV evaluating disciplined, be been it teams know, after across see parts that terms focused. where of as long-term which quarter. that has business that that's drive we been, in efficient. around more to as certain marketing across look and channels, can the and we We around push

Brooke Roach

And for level just down international one contemplating revenue the the what then of Daniella. X% U.S. to growth follow-up year? flat outlook quick around Great. you in thoughts Can guide for versus you're

Daniella Turenshine

in out not We're the buckets. specific breaking

our intentional innovation product the drive across both mentioned, driving business campaigns and ultimately going really than are growth international to that's storytelling stages, portfolio, to similar we've with combining is earlier the in trajectory international and cohesive over in I past, and expecting be think U.S. the brand what that and But Tina as stronger seen think we're I the focused time. U.S. to on the and we

Operator

is question Group. Telsey Dana Telsey from next with Advisory Our

Dana Telsey

you campaign -- best about product Daniella. Trina as to focus of to launches more part on mentioned Hi, storytelling better the of too. it, and luck,

on looking you brought you with both in now. As consumer we given scrubs product the should the How the excitement do through also product cadence product for wear? the more story? -- that be in offering, drive What consumer and to people we go see challenges new telling you've about how XXXX, the think nonscrub Trina, do in

Catherine Spear

are what Thank exciting different environments. care stories to you, professionals extreme to be really Dana. in bring It's doing able health around

driving, behind One extreme. showcasing year for super so like for is And which which is Bennett, is medical someone big leading we though teams car Formula director campaign he And Luke our the even medical cool. the the Dr. Hintsa, basically is race as feel

entire within launched, And that this elements the so story, also that bringing and racing of a that across that campaign. extremes telling brought the quarter across outerwear elements outerwear. different scrubs, suit ties in profession, that different We've of had tying the number innovation that we different to that tying collection but launches to to

is a for and us so And not community this core. in really to for pinnacle exciting them but drive just of drive our direction excitement also themselves, products launching the that

continue that's we're to do. so where And -- going to

made believe fabrication, now to developing the is are hiking new health climbing. outerwear And outside still scrub care go There's jackets opportunity a change massive going and that within fabrications scrubber are right game. are a of wearing lot to we're that we then of within two professionals category wear, rock

X these outerwear is And marketing, and would But the is for I product, a scrubs really way where across sure. of three, we're tying runway, as say, layering so tying lot kind two the of and then pieces its there's together headed. in intentional is merchandising a direction and these and second pieces behind in its system the really

Operator

TD Our Kernan with from next John Cowen. question is

John Kernan

at take Daniella. selling to fiscal wanted the and the expenses outlook 'XX, selling a look beyond Just for

As decline the of And margin top line business? for to growth growth sales? a top you is you do think line selling normalized will see need that what a as returns, of type what percent rate

Daniella Turenshine

John. question, the for Thanks

So original $XX $XX million to This enhancement the $XX quarter we compares costs million about nonrecurring discussed, of transitory. project the XXXX. through fulfillment selling previously, as have reiterate, we cited with third million to our is to of in associated just that we that kind

year, transition this There expand efficiency, network investments to are us flexibility, serve really and drive speed to our to future. the be in higher the these also will associated to beyond roll our and better enable facility, going the accuracy looking us with really those better are distribution costs for to but off. foundation setting So customers

higher expand there's our closer than to inventory. leverage to is network we at excess costs in Looking also as said that of as and facilities would we these using the offset we serving lot storage gained lower believe we XXXX do Over international item to shipping scale. house a ongoing pretty the and like. use savings customers script, as this are our time, to baseline And distribution as we level do have the fees no longer going costs, by a that opportunity the forward good line

open as in XXXX. do Canada think so we to mentioned, early I And we plan a DC

of to going the that's on So important and be driver profitability really revenue a horizon.

John Kernan

That's it is helpful. high what how should cap? And about back levels long-term margin the adjusted mid- the EBITDA How the gross that the been XX%, then we EBITDA that? of when at adjusted to XX%, with you've margin hovering recently, And drivers underlying look look of we think does to margin, in been the past? you've teens higher around in

Daniella Turenshine

Yes.

to can I depending to delivered return teens growth, EBITDA we margin XX% EBITDA look, quickly. sales our proud high fairly in the think, year. adjusted have past believe margin almost that we super on do

at and consistency. margin. there drive costing I investments the of while healthy maintain base driving our opportunity there. back continuing into think supplier innovation, scale We're really through some then And P&L into quality I Selling the think our and we core a in spoke continue kind optimize looking puts takes also chatted and have we buckets, just we really those business to to more continuing better gains expense, rate invest future, about and to gross you the to of growth. the in as

growth G&A, to to not return on down I continue going also leverage environment. in depending in in to invest in we think to or we're but going spend, we're flex believe as the seeing Trina as term. marketing near right, to ability have growth, make we continue the going we're sacrifices. time, up to discussed, And remain can We're but to the efficient over what short-term we

our high think think it's shows core margin, it's I business, profitable. I XXXX it's that highly replenishment-driven

some I in pressure really that creating short-term of some think impacts business remain are our there's XXXX, fundamentals strong. but

Operator

Rick with Raymond next James. from Our is Patel question

Unknown Analyst

you Josh what in many to in Any -- how XXXX? active in in XQ. customer customer think filling here. could achieved [ new you versus was compared I markets? international the the on potential about came should context a Rick how growth Reese on is for dig ] that growth bit from U.S. deeper we And hoping This XXXX how of much

Daniella Turenshine

We mix a FIGS two. in that rates I customer U.S. the and between of active of I International the growth. cases, is don't international, to driver the customers stronger the to provide more family. more growth into think continue we think, between similar and lot add breakout on both have we're underpenetrated, a But opportunity to seeing we are

of we strong a gross adds comping in XXXX, about, as Looking we've customer XXXX. are really been into period speaking

a active As years, the we've our base. last over reminder, several doubled actually customer

we're some really so we And brand an speaking have intentional opportunity this And think comping storytelling. as here. time, to really our over innovation with product was numbers to, I big Trina marry

of that these be a is time. and we're some acquisition as large funnel I XXXX. but we growth are result, will doing top into customer speaking think And customer driver, pressure to a the marketing looking to take going active strategies

Operator

Our next Koranda Matt with from question is Roth MKM.

Matt Koranda

to like the then single-digit promotions? guide at could high given product 'XX. terms low clarify and outlook the midpoint. just the end factors puts of it overall be successful for maybe [indiscernible]? you it you then and towards Is in of launches? the on sort end across of of of quarter top growth sort Is you Is year, the phasing should improved of what that more that of And the more just swing that's negative an what the revenue wanted just And talk just it the the if growth about bottom guide, quarter said the are the in sort end. macro lowest

Daniella Turenshine

year QX just to, we have because So be larger the we cadence did are the quarter position spoke to a throughout of comping that we successful inventory growth drive third where we a sale in the event. the most are looking expecting at challenged year, to very that sample last of

of I'll Speaking Trina. to pass it over to outperformance kind outlook. to our

Catherine Spear

Okay.

In that of lagging. our I to completely be health is the that things in success rate. scrub that we'll a terms there's didn't a think exist outlook, saw care. outperformance of our able We with drive number category new to This

how year. to is around outperform community replenish are throughout not coming catering more it a that successful. number And the have to bring lot different often so an there do to perspective around of And be a year doing expectations. to ability being marketing replenishment from of excitement And our and bringing also for that is a back are to things there's you -- to only able of this the bring evergreen aspect bring launches, we're core, that. top there's our but excitement to innovations number throughout And we're and some needing pant. that the the There there

Matt Koranda

And Okay. on then just Helpful. project. the fulfillment

now the changed in about $XX huge million. Just think I on difference, It's be a not it's terms curious it what costs of to used numbers. total $XX million but project and

change understand out a bit Just what Maybe the came of us there? about that? help little

Daniella Turenshine

Yes.

throughout tandem updates our facilities timing we this and has the gone duration closer be it's running really of transition we've As the year down. project just cost to to to helped plan in will both bring that taking and need gotten the place, to

that our and down expenses that have recent glad optimize to come looking with most those see to So transitory expectations.

Operator

with is question Kelleher next Angus from Barclays. Our

Unknown Analyst

Adrienne. This venture. your is on wishing Angus for next Daniella, on well you

you will benefit warehousing the expense, do of you the to for think recapturing new ahead quarters expect degree XQ? store how And offset it's your do As XXXX curious And selling the which costs? to look few now open beyond enhancement with timing a along many you the how for follow-up, been a benefit fulfillment to it about given months. project get from as that about

So share any you could there? new learnings wins or early

Daniella Turenshine

will we it pulled to we are the second costs expense, we but outlook that we XXXX. take did place that through of some as relates had it in that largest our be relates discuss that to cost And the transitory getting to we transition. inventory looking will previously the as expecting selling Those are expecting for facility quarter in QX. as So we're will house new costs see excess our gains that the from the look forward, into costs offset those of transitory we at to ongoing QX

to And expense expect pretty in think to selling transitory over expenses, baseline about the turn So XXXX a for good those our store. represents we Tina it be I'll looking talk where to past that we future.

Catherine Spear

Yes.

number hub excited had of And room. open community the to summer. lines been the traffic. of we've We've days is and success the early Century to As lines format. City, really the about really seen our outside where a it the a down relates there's for way realized, what is think our X,XXX store. pleased I we've have We're fitting with growth bigger square are number been learnings, in all of really had Philly store we've There to this feet. It a all

that location how to to see exciting And our people of XX% customers excited that some new over with just may FIGS. can the that format that FIGS, in about we what continue brand the have dynamics build of But does. not are so to we're showing know to

think is retail that unlock and -- presence, engaging hub And important, having really we're community to showing and that's having what a person lot that so we having going different of we're events doing really so we're digitally. element up in community doing our in

so online. I mean, XX.X% shop the of call, consumers think And mentioned on I I

it's of is important. brand the has. And going that love community engagement VIG our and strategy So further to really community only hubs having stores, having part as

what's So very come. excited about to

Operator

last is Guggenheim Our from question Drbul Bob with Partners.

Robert Drbul

Two questions, quick questions.

the a from is And up prior York is as environment, store an Just following branding of are contemplating rationalization you sort a slower sort to one the on a perspective? just City the where second area from first about slower considering? you're The retail environment. store think question approaching New question, opportunity this is you're you is, SKU of trying there a understand how that like

Catherine Spear

York excited New health New in our markets. markets, one hospitals amazing It's one largest an Bob. very our of been key has amazing York. we're about care Yes, It Thanks, of facilities, City.

And all it up, City. but so get we'll lining excited We're New York about there. very

things volume special a such and so of In SKU FIGS the is SKU I think one terms a relatively count. business having makes model that high with great very of rationalization, low

something this productivity uniform company. to unique a SKU replenishment-driven being unique something to a company. having so It's And is level being of

we where you count we And you are the and year continuing more a to good will a where conference to feel about an continue joining position. Thank drive that is XXXX strategy from full We'll see for our we inventory very all are from soon. same and people to QX SKU position so products follow, call. but

Operator

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

line. disconnect You now your may

FIGS (FIGS) 28 Feb 242023 Q4 Earnings call transcript