Matt Koranda: Thank you, I’ll leave it there.
Operator: Thank you, Matt. Our next question comes from Dana Telsey with the company Telsey Group. Dana, your line is not open.
Dana Telsey: Hi, good afternoon everyone. Trina, as you think about the product mix shift that is ongoing, what are you going to — what are you going from — how is the pricing on new product changing or adapting? And now we’re in the middle of Nurses Week, what are you seeing this year that’s different than last year? Is there a pick up on momentum? Is it a product category that you’re seeing with that momentum improving? Thank you.
Trina Spear: Thanks, Dana. Great to speak with you again. So I think we set out to diversify the business from a product standpoint, diversify by category, our outerwear, our under-scrubs, our compression socks, what are [care] (ph) professionals wearing to work, at work, from work, on shift, off shift, head to toe? We’re not just a scrubs company anymore. And you see it in the numbers. Over 20% of this business is everything outside of scrubs. And even within scrubs, we’ve made huge strides from an innovation standpoint, like I mentioned, doubling as a contribution to the business, our limited edition scrub ware. And so a lot of that does come with higher AUR. So that’s great to see. New innovation drives UPT as well, which gives leverage, as you know, across rate, fulfillment, and marketing.
And while product margins at the beginning are a bit lower on paper, the order economics really do offset that. And so I think, we’re projecting for the year an AOV gain from AUR and UPT like I just discussed. In terms of Nurses Week, I think, we’re off to a really strong start. It’s really exciting to see the engagement. We actually kicked off Nurses Week at the New York Stock Exchange with our nurses on the podium with back to what we’re all about, celebrating this community in awesome ways, in memorable ways, and getting the whole world behind them to see the work that they are doing and celebrate them and just put them on a pedestal which is literally what we did. And I’m so excited that we had that moment and how do we continue to engage with them.
It’s going to be an exciting year.
Dana Telsey: Any learnings from the retail store and when does Philadelphia open?
Trina Spear: The retail store. The store has been great. 40% of our community that is purchasing within the store are new customers, and this is in our most penetrating market of Los Angeles, so that’s great to see. Healthcare professionals are like everybody else. They want to engage with brands both online and off, and we’re seeing that in our Century City store. Philly is coming in late summer which we’re super excited about on Walnut Street. And it’s a great space. It’s a larger format than Century City. And we’re really excited about the community space on the second floor where we’re going to be able to engage with speaking events and different activations. It’s going to be so awesome. So I’ll send you that invite, Dana, because you’ve got to come.
Dana Telsey: Okay. Thank you very much and nice to see the progress.
Trina Spear: Thank you.
Operator: Thank you, Dana. Our next question comes from Bob Drbul with the company Guggenheim. Bob, your line is now open.
Bob Drbul: Hi, good afternoon, everyone. I guess, Trina, I was just wondering if you could talk more about the customer a little bit. You mentioned pressures on the healthcare professionals last quarter, and I think that impacted demand. Is it changing now? If it hasn’t changed, what do you really think is spurring some of the demand? And I guess the other piece of this is, do you think the replacement cycle is bottoming?
Trina Spear: Thanks, Bob. So we’re seeing signs, like I said, that repeat rates have bottomed and are now rising and heading in a positive direction. This is something we’ve talked about for a while, and so it’s really exciting to see that. It’s still early days, but these leading indicators make us very hopeful about the health of our consumer, about the health of the healthcare professional that is starting to turn a corner. And more generally, we’ve spoken about some of the systemic issues with healthcare professionals will remain focused on fixing the structural issues in healthcare, and it’s why we fight so hard on advocacy for our community with our Awesome Humans bill. So that’s really something that we are going to continue to fight for.
In terms of the replacement cycle, we’re nowhere near the normalization of repeat dynamics in this industry. You saw that repeat frequency, that replacement cycle, if you will, it kind of, it was definitely normalized pre-COVID, pre-pandemic, it spiked during COVID, and we’re still in a bit of a lull, but It’s great to see that that’s bottomed. Thanks, Bob.
Operator: Thank you, Bob. Our next question comes from Brooke Roach with the company Goldman Sachs. Brooke, your line is now open.
Brooke Roach: Good afternoon and thank you for taking our question. Trina, you’ve spoken to the green shoots that you’ve been seeing in the non-scrub category, as well as new limited edition product. Can you elaborate on the growth rates and frequency trends that you’re seeing within your core US scrubs business? And is the core scrub customer engaging more at full price, or has more of this green shoot growth been driven by key promotional moments?
Trina Spear: So I think what we’ve seen is with the innovation is that it’s not only driving you know sell through in those styles and in those categories, it’s also driving the core. And it’s two things that we say here at FIGS is Pinnacle drives core and repeat drives new. And so that dynamic of launching new products, new innovation that has really been exciting year-to-date is driving not only engagement in those styles and engagement in those categories, but also engagement in the core. So that’s great to see. And core is kind of a lagging indicator to the sell throughs across the Pinnacle or across limited edition. In terms of, sorry Brooke, what was your second piece of that question?
Brooke Roach: Just whether or not that consumer is engaging more at full price or if more of these screen shoots have been driven by promotional moments.
Trina Spear: We haven’t seen much shift year over year from the engagement across full price versus promotional moments. So we continue to be incredibly disciplined and you see it in the gross margin, incredibly disciplined around our promotional cadence, incredibly disciplined around that level of promotion. And so the — it’s exciting to see that engagement level isn’t just coming, you know, during those moments.
Brooke Roach: Great. And then just finally for me, can you help us break down the growth expectation that you have between your international and your US business for both 2Q and the full year given the updated guidance forecast?
