Alice Xiao: Hi, thank you for taking my question. I’m hoping to get more detail about teams and international since those are the two areas driving your new customer acquisition. How big is each as a percent of sales now? What are the long-term impacts to AOV as both of these categories grow, i.e., does teams provide an AOV benefit given the bulk orders? And then does international AOV tend to be higher or lower than domestic? And then lastly, to summarize all that if you could touch upon the contribution margins for both of these categories as well? Thank you.
Daniella Turenshine: So looking at our teams and international businesses. So, speaking to the AOV that we see in each of those, teams does carry a higher AOV as these are generally larger orders. It also has a higher contribution margin, so gross margin is pretty similar. We do see some offset in higher discounts for these bulk orders, but generally they are buying more of our core product, which helps to keep gross margin relatively stable. And then we get a lot of benefits below gross margin looking at efficiencies in outbound shipping. And also today, it’s entirely inbound, so no marketing expense. So, teams really accretive from a contribution margin standpoint. International today carries a slightly lower AOV, but we see a lot of opportunity to drive that higher over time.
From a contribution margin perspective today, we’re really focused on keeping the experience similar for our international customers. And so, to do that, we’re subsidizing a lot of the shipping and duty expenses as we sell from our – our distribution center in California. From a marketing perspective, as Trina mentioned, we’re really efficient. And so, as we expand our distribution network, as we open a Canadian DC in 2025, like we spoke to, we see a lot of opportunity to drive better profitability in international over the long-term because of the strong fundamentals that we have today.
Alice Xiao: Thank you.
Operator: Our next question is from Adrienne Yih with Barclays. Your line is now open.
Adrienne Yih: Great, thank you. Good afternoon. My one question – my first question is on the community hub that you released this afternoon. Trina, can you talk about the store, if you have any metrics at all? And I know it’s kind of the first store, but really kind of the intention behind it. Is it intended to be more of a showroom environment or is it a kind of fully stand-alone box with depth and breadth of inventory? And then my second question for Daniella is on the supply chain. It sounds like you’re sort of back to normal supply, but it doesn’t sound like there is a ton of inbound manufacturing. When would you think that the kind of – when would you restart up kind of manufacturing? And how much of the new product that you would be kind of manufacturing is going to be new versus core? Thank you.
Trina Spear: Thank you. So, in terms of the store or community hub, we couldn’t be more excited about it. It’s the first solely branded healthcare apparel store in the world, which is crazy to say because this was a dream that we had about 11 years ago. And since then, there is really been no place for healthcare professionals to go and not only get their uniforms so they can do their job, but also connect with each other. And we’re really excited about that, providing that. And so, that’s why we’re so excited about the programing we’re going to have and the way in which we’re going to engage with our community. I think our communities can be able to learn more about our products. They are going to be able to try it on, really understand their size and all the different styles or different fabrications.
And this is – I mean, we couldn’t be more excited. I think the largest, most iconic brands have stores, and our plan is to be a very large, very iconic brand for a long, long time. It’s not a showroom, so we carry inventory and so you can get what you need and you can leave the store with the uniform that you need. You might have to go to work the next day and you want to wear your new things, and we want to provide that opportunity. And so, we’re officially opening tomorrow. So, we will be providing you with all the detail in the future. But if you are in LA, please come by.
Adrienne Yih: Well, congrats on that.
Trina Spear: Thank you.
Daniella Turenshine: On your question on inventory, so we are really proud to be working down our inventory balance while sustaining such a strong gross margin rate. We have work to bring inventory down by lowering receipts in the fourth quarter, but I think it’s important to note that we are still bringing in new products just in shallower buys. It’s not going to feel very different to our customers, and it’s still going to enable us to drive excitement and engagement. We are going to continue to play on lower core orders to bring our inventory balance down while still bringing newness and innovation going into 2024.
Adrienne Yih: Great. Thank you very much. Best of luck.
Daniella Turenshine: Thank you.
Operator: Our next question is from Rick Patel with Raymond James. Your line is now open.
Rick Patel: Thank you. Good afternoon. I am hoping you could dig deeper into the international business. So, you have launched in a lot of new markets within the past couple of years. What have you learned about what works, what doesn’t? And then as we think about the next year, do you have more countries in the pipeline that you expect to launch in or are you going to focus more on your existing markets?
Trina Spear: Thanks Rick. Okay. So, I think from an international perspective, what we have learned is that our localization strategies are really working. When we are localizing our messaging, our communications, even our products and what we are showing on our site at any given time, obviously, our currency, being able to check out and pay in local currency is really important. So, localization is really going well. I think the other thing that is working well is how we are being opportunistic, right. We are seeing the demand organically from a number of countries, and we are opening them up and we are not even really spending on marketing. And we are seeing that demand and we are seeing that build in markets that maybe we weren’t even planning over a year or so ago to open that market.
And that’s been really exciting. So – and I think the other thing that’s been really great to see is the word-of-mouth dynamics. They are very similar to what we have seen in the United States, that we are seeing different markets in these tipping points around how people are coming back and engaging with the brand over time, how referrals and people are telling their friends, their colleagues about FIGS. And that’s been really great to see. And so, going into next year and beyond, I think we are going to continue to be opportunistic. We are obviously going to invest in our existing markets and ensure that we continue to build the brand. And as we see the brand awareness grow, we are going to continue to invest behind that. But we are also going to be opportunistic as we open up new markets next year.
Rick Patel: Can you also touch on the outlook for promotional events in the fourth quarter? I am curious if you expect a similar cadence to last year or if you have different activations in mind?
