So what we’ve done is we’ve looked across the marketing funnel and we’re taking concerted efforts to right size our spend across upper and mid-funnel tactics. And because we do believe we shifted away from this over the past year or so. So I do think what you’ll see is that this is going to drive growth, and it is going to drive profitability over the long run, but these are longer term types of investments. And there’s an interesting stat from a consumer landscape industry perspective. Upper funnel marketing investments drive awareness that lead to high quality organic traffic which converts three times higher than traffic driven directly from paid ads. This is an important dynamic that we’re excited to lean heavier into. So we’re leveraging that spend to continue to show up and engage our community.
Ultimately, this is going to equate to retaining our customers and bringing more healthcare professionals into the fold. And as we go into 2025 and 2026, we’ll update you as we go.
Lorraine Hutchinson: Thank you.
Operator: Thank you, Lorraine. Our next question comes from Ashley Owens with the company KeyBanc Capital Markets. Ashley, your line is now open.
Chandana Madaka: Hi. Thanks for taking my question. This is Chandana Madaka on for Ashley today. So I just kind of wanted to ask on fit initiatives. Could we dig a bit deeper into the initiative behind that that began launching in April where it’s been rolled out already and where you’re planning to complete by October?
Trina Spear: Sure, thank you for the question So delivering consistent fit across our assortment is a non-negotiable. This has been something that’s been underway for quite some time, but being able to have your uniform fit the same way every time what you ordered six months ago as a healthcare professional. Maybe you ordered the Catarina Top and the YOLA pant, two of our best-selling items, and you come back six months later. It has to fit exactly the same as long as your body didn’t change. So this is a really important initiative. And we believe this transition is going to help improve repeat frequency and retention. And we really want to ensure that we’re delivering the best experience to our healthcare community at all times.
We expect inventory, like I said, to continue to decrease on a year-over-year basis for the remainder of the year, even with the pull forward of inventory related to the fit transition. And as we monitor selling trends, we’re going to manage our inventory levels accordingly. But like I said, we do feel like we’re in a very healthy position today. It’s why we were able to bring in all of this newness and innovation that we’re really excited about.
Chandana Madaka: Awesome, thank you. And then just kind of following up on that inventory piece. Could you provide us with a refresh on maybe your expected promotional cadence you’re planning for this year now that, you know, it’s at a more normalized level? So how are you thinking about that?
Trina Spear: We’re going to continue to be disciplined around our promotional cadence and we’re going to continue to really utilize promotions in a very celebratory way. Right now it’s Nurses Week which is our Super Bowl. So you see the offer that we have on our site and it’s really about celebrating our community and inspiring the next generation to want to become them. And so we’re going to be really leaning into those moments and not shifting our cadence from what you’ve seen in the past and what you will see year-over-year.
Chandana Madaka: Awesome, thank you.
Operator: Thank you, Ashley. Our next question comes from Nathan Feather with the company Morgan Stanley. Nathan, your line is not open.
Nathan Feather: Hey everyone, thanks for taking the question. So you’ve run two sample sales relatively close to each other at least relative to your historical cadence. I guess you talked to the thought process there, what kind of uplift it generated, and then do you expect the 1Q sample sale you ran to pull forward any demand from 2Q, similar to the prior sample sale on the back half of last year. Thank you.
Trina Spear: So we do a sample sale once a year, and we don’t look to comp period over period. So last year it was in Q3, this year it’s in Q1. And it’s really about when we look to do that, when it makes sense to engage our community with that type of exclusivity. You’re able to kind of get older styles and older colors, and it’s a really exciting time. And so that was about I do — I don’t believe also just given what we’re seeing the trends that you know there is going to be a pull forward into Q1 from Q2.
Nathan Feather: Great, thank you.
Operator: Thank you, Nathan. Our next question comes from Matt Koranda with the company Roth MKM. Matt, your line is now open.
Matt Koranda: Hey, thanks for taking the questions. Just wanted to circle in on the purchasing dynamics and the inflection that you saw later in the quarter. So maybe just curious if you can drill down on where you think the inflection is coming from. Is it coming from new customers to the brand? Is it coming from existing active customers that are tightening their purchase cycle? Or is it active customers that basically went dormant for a period of time post-pandemic? Just any detail around that and maybe just to unpack regionality if there is any or — any sub segments among your health care professionals.
Trina Spear: So we’ve really seen that improvement coming from the repeat frequency, right? It’s customers, active customers, it’s customers that have laps that are coming back that are so excited by the innovation and so excited by our storytelling. And so that it really does illustrate the power of our plan, the plan that we’ve spoken about, bringing true innovation combined with impactful storytelling and that working. We believe, and we’ve always seen in this business, that repeat drives in, repeat customers are walking around their hospitals, walking around their institutions, wearing FIGS, acquiring customers for us. This word of mouth dynamic is super powerful. There are densely populated institutions acquiring customers for us.
So as that repeat frequency continues, we’ll see that kind of a new kind of come behind it. And we’ve seen, you asked about geography, we’ve seen strong frequency and reactivation in both the United States as well as in our international markets. And we’re seeing not only just with repeat in terms of our active customers, but also in terms of a number of other metrics across the business.
Matt Koranda: Okay, that’s helpful. Thanks, Trina. And then just in terms of the change to the margin guidance, I just wanted to make sure that we’re all super clear. It sounded like you said gross margin for the full year shouldn’t change so we’re still expecting kind of flattish gross margin for the year. So all of the incremental EBITDA margin cut is essentially coming from the marketing line?
Trina Spear: That’s correct. So gross margin relatively flat year-over-year and the EBITDA update is really around us investing and doubling down on what’s working, and doubling down on engaging our community in awesome ways. We have $259 million of cash. We have no debt. This is a highly cash flow generative business, and we’re investing in ourselves.
