FIGS, Inc. Q3 FY2024 earnings call

• Brand and product wins: Impactful campaigns like outfitting Team USA Medical Team for Olympics, US Open partnership, back-to-school focus on medical students, and breast cancer awareness initiatives.
• Product initiatives: Standardized core fit blocks, plan to introduce new fabric innovation, partnership with New Balance for 3447 footwear model.
• International and business growth: International revenues up, focus on Asia, TEAMS business expansion with outbound sales team, and opening of second Community Hub in Philadelphia with plans for more in 2025.
• Investment: $25 million minority investment in OOG, an education platform for healthcare professionals.

Net revenues decreased 2% to $140.2 million. Scrubwear increased 2%, representing 84% of net revenues. Non-scrubwear declined 16%, representing 16% of net revenues. Footwear was a key driver of the non-scrubwear decline due to stock-outs, delayed launches, and exclusion from promotions.

• Full year 2024 net revenue outlook adjusted to negative 1% to flat growth from prior flat to positive 2% guidance.
• Full year gross margins expected to be 150-170 basis points lower than prior year.
• Adjusted EBITDA margin updated to approximately 8% from prior range of 9.5-10%.
• Plan to add Canadian distribution center in second half of 2025.

• Footwear stock-outs and delays in launches.
• Promotional timing issues affecting back-to-school and holiday periods.
• Higher expenses at new fulfillment center due to ramp-up costs and lower order values.
• Potential tariff impacts on international supply chain.

Q: How long does it take for Olympics marketing campaign to translate into demand?

A: Leading indicators like search, traffic, TEAMS leads, and email subscribers are up, with benefits expected to accrue over time, sometimes years.

Q: What's the impact of footwear on Q3 sales?

A: Footwear exclusion from promotions, delayed launch of 3447, and stock-outs in a key style impacted sales.

Q: How is AOV impacted?

A: AOV down due to reclassification of duty subsidies, higher discounts, and inventory cleanup through sample sales.