Good afternoon. Thank you for attending today's FIGS First Quarter 2024 earnings conference call. My name is Jayla, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. I'd now like to turn the conference over to our host, Jean Fontana. Please go ahead. Good afternoon, and thank you for joining today's call to discuss FIGS first quarter 2024 results, which we released this afternoon and can be found in our earnings press release and in a stockholder presentation posted on our investor relations website at ir.figs.com. Presenting on today's call are Trina Spear, our co-founder and Chief Executive Officer, and Kevin Fosty, our Interim Chief Financial Officer. As a reminder, remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including about future financial performance, market opportunity, or business plans. Forward-looking statements involve risks and uncertainties, and actual results could differ materially. These and other risks are discussed in our SEC filings, including in the 10-Q filed today, which we encourage you to review. Do not place undue reliance on forward-looking statements, which speak only as of today and which we undertake no obligation to update. Finally, we will discuss certain non-GAAP metrics and key performance indicators, which we believe are useful supplemental measures for understanding our business. Definitions and reconciliations to these non-GAAP measures to their most comparable GAAP measures are included in the stockholder presentation we issued today. Now I'd like to turn the call over to Trina Spear, Chief Executive Officer of FIGS. Thank you, Jean. We were pleased with our first quarter results. Net revenues came in at the upper end of our expected range at down less than 1%, and the adjusted EBITDA margin of 10.9% exceeded our expectations. We were especially excited to see improved momentum in our business beginning in mid-March and into the second quarter. Over the last few quarters, we discussed factors that we believed were impacting our performance, and we made changes in response to these challenges. We got back to our roots in delivering incredible product innovation coupled with impactful storytelling centered around the healthcare community. We're seeing these actions begin to pay off. As we have said in the past, healthcare professionals need their uniforms to perform at their jobs and need to regularly replenish these products. The highly attractive fundamentals of our business are in large part due to the repeat frequency dynamics of healthcare apparel. We are seeing these frequency trends begin to stabilize, and we plan to build on this momentum. Reflecting on the business, we are delivering strong performance across our growth strategies. Starting with product, we raised the bar on innovation. Over the last two years, we've bolstered our product team further building out our design and technical development talent. We've also bolstered our supply chain with best-in-class manufacturing partners. The results of these investments are beginning to bear fruit. In the first quarter, we saw strong engagement generated by new products, including our On-Shift Sherpa Bomber jacket, Seville ScrubL egging, and Isabel Wide Leg Scrub Pants. Notably, these launches also created demand for our core assortment. This is just the beginning. We plan to offer a steady stream of true pinnacle products, including new fabrications and categories that will push the limits of anything healthcare professionals have ever seen before. We believe this innovation will bring unprecedented functionality, fit, comfort, design, with greater velocity. The halo from these pinnacle products is also driving demand for our core styles. As part of our amplified innovation strategy, we have made the decision to accelerate the timeline of our initiative to improve fit consistency across our assortment. We began to introduce our new fit blocks in April and now expect to complete the rollout by October 2024. Our new product innovation will be fused with marketing campaigns rooted in true storytelling centered on the awesome humans that make up our community. In April, as part of our Extreme series, we launched our Call of the Wild campaign featuring Dr. Chloe, a veterinarian who operates on the front line of wildlife conservation. The product capsule featured our Indestructible scrub overalls and scrub jumpsuit, each of which quickly sold out. The collection was made in a new fabrication that's tough on the outside and soft on the inside, providing extra durability, stretch, moisture-wicking, and water resistance. The product launch was amplified by a meticulously executed campaign that celebrated this extraordinary work. The campaign, which we filmed in South Africa, captured the hearts and the minds of our community, drawing nine million impressions among a wide range of healthcare professionals who were in awe of Dr. Chloe's mission. This past Sunday, the kickoff Nurses Week, we hosted a celebratory event in New York City with over 100 awesome humans. On Monday, we brought 13 nurses from across the country to ring the opening bell at the New York Stock Exchange in recognition of Nurses Week. We also kicked off our annual I'm a Nurse campaign, which celebrates our incredible nursing community. The momentum we have seen in our recent launches illustrates the opportunity we have to truly lead with brand storytelling. At FIGS, we obsess over customer journeys and look at the full marketing funnel to meet our community members where they are. We have an amazing community, and we provide the platform for them to share their stories. Awesome human storytelling is not new for us. It's in our DNA. And as we look ahead, we have a huge opportunity to deliver more tentpole brand-defining campaigns and to put more investment behind top-of-the-funnel initiatives. In parallel, we will continue to focus on the unique needs and interests of healthcare professionals and effectively move customers through a full journey, driving not only awareness but also consideration and conversion, ensuring that each marketing touchpoint builds on the last. This approach will lead to greater brand engagement among new, lapsed, and existing customers and fuel growth and profitability. Based on our recent strong momentum, we're further leaning in and taking bigger and bolder steps to grow our community globally across channels. This means we're strategically ramping investments primarily around brand marketing in response to the encouraging trends we're seeing in the U.S. market, strong momentum in our international business, and a growing network of institutions joining our team's platform. International net revenues grew 29% in the first quarter compared to last year, reflecting the reclassification of duty subsidies, which negatively impacted net revenue growth by 11 percentage points. We continue to gain traction across the countries we serve and plan to identify new markets where we believe FIGS can become the leader in healthcare apparel. Similar to the building blocks of our success in the U.S., our global marketing strategy focuses on full-funnel storytelling with investments in our ambassador program, digital marketing, and localized e-commerce experiences. Turning to Teams, we made investments in building foundational ordering experiences for two of our largest Teams customers with the development of the AYA gifting platform and the VEG stipend experience. Looking ahead, we're eager to evolve and amplify these in other ordering platforms with the support of an outbound sales team and digital marketing effort in order to serve more teams in more ways. Finally, with respect to retail, we're incredibly excited by the prospect of being able to serve more healthcare professionals and look forward to the opening of our Philadelphia location. We acknowledge that we're early in our retail journey and we're learning more each day. We remain committed to our test-learn, apply, and win approach with locations and formats and do not currently plan to meaningfully accelerate new hub openings until we can achieve key proof points. Operationally, we're on track with our fulfillment center transition designed to support greater scale, increase flexibility and reliability, and deliver greater efficiency. In addition, the foundational work behind this facility will help us to expand and scale our distribution network globally. This will not only support our growth but enable us to deliver a superior customer experience across geographies. Importantly, we remain committed to delivering incredible brand cultural moments supporting the healthcare community by highlighting the work that they do and by giving back. In January, we opened the FIGS Operating Theater in Ukwala, Kenya, a state-of-the-art facility that is the first of its kind in the region. It's now creating sustainable change for people in this community who previously had to drive hours to receive surgical care. As we look to the remainder of 2024, we believe we're on the right path to reignite the excitement and word-of-mouth dynamics that propelled us to a leadership position in the industry. We're seeing the trends move in a positive direction, and we're strategically investing in that momentum while remaining disciplined in controlling our expenses. The long-term growth outlook of the healthcare industry and favorable replenishment dynamics, coupled with our strong debt-free balance sheet and robust cash flow generation, provide a solid foundation to execute and invest in our growth plans. As the dominant leader in healthcare apparel, we recognize the urgent need to serve healthcare professionals, and we are at the forefront of this effort. Now, I will pass it over to Kevin Fosty to discuss our financial results and provide an update on our outlook. Thank you, Trina. For the first quarter, net revenues came in at the upper end of our guidance range while Adjusted EBITDA margin exceeded our expectations, yielding strong free cash flow generation. We were also encouraged to see improving trends, particularly around repeat frequency, indicating that our product and marketing strategies are gaining traction. With a steadfast commitment to serving the healthcare community, we are highly optimistic about our ability to drive accelerated growth into the future. While margins are expected to be impacted in the short term, we are confident that these investments will not only drive higher net revenues growth in the future but also stronger and more sustainable profitability. I will begin my discussion with a detailed review of our first quarter results, followed by an update on our financial outlook. Starting with our first quarter results, net revenues decreased 0.8% to $119.3 million as compared to Q1 last year. Net revenues reflect $1.4 million in contra revenue associated with duty subsidies paid for international customers. As a reminder, duty subsidies were recorded as selling expense in last year's first quarter. Active customers for the trailing 12-month period increased 8.6% compared to the same period last year. Average order value increased 1.8% to $116 in the first quarter, reflecting higher AUR due to product mix and higher UPTs. Net revenues per active customer on a trailing 12-month basis decreased 2.8% to $210 versus the same period last year. These metrics reflect the aforementioned international duty subsidies, which negatively impacted both AOV and net revenues per active customer growth by approximately one percentage point each. Looking at product categories, non-scrubs grew 9%, reaching 20.5% of net revenues. Gross margin for Q1 was 68.9% compared to 71.3% in Q1 of 2023. The decline in gross margin rate was primarily due to product mix shift. Selling expense for Q1 was $28.5 million, representing 23.9% of net revenues compared to 25.9% in Q1 2023. The decrease in selling expense as a percentage of net revenues primarily reflects duty subsidies that were recorded in selling expense last year and are now reflected in net revenues as contra revenue. These costs were partially offset by startup costs associated with the transition of our fulfillment center to a new facility. As Trina mentioned, the new facility will enable greater efficiencies and set the foundation to expand our distribution network. Please note, transitory costs related to the fulfillment enhancement project came in below our expectations, in part due to a timing shift into the second quarter and in part due to lower-than-expected startup costs. Marketing expense for Q1 was $17.2 million, representing 14.5% of net revenues compared to 14.2% in Q1 2023. The increase in marketing expense as a percentage of sales was largely due to an increased mix in international marketing spend. G&A for Q1 was $36 million, representing 30.2% of net revenues compared to 28.4% in Q1 2023. The increase in G&A as a percentage of sales was largely due to the continued investments in people. This was partially offset by a decrease in legal fees, lower accrual for charitable donations, and reduced professional fees versus last year. Taking this to the bottom line, first quarter net income was $1.4 million or diluted EPS of $0.01. First quarter 2023 net income was $1.9 million or $0.01 in diluted EPS. Adjusted EBITDA for Q1 was $13 million with an adjusted EBITDA margin of 10.9% compared to 13.4% in Q1 2023. Touching on our balance sheet, we finished the first quarter with cash and cash equivalents and short-term investments of $259.2 million. Inventory declined 28% to $130.5 million versus Q1 last year as we continue to make progress in bringing our inventory back to normalized levels. Overall, we are very comfortable with the composition of our inventory. Capital expenditures for the first quarter totaled $4.5 million. This is largely associated with the fulfillment transition project. And finally, we delivered strong free cash flow of $11.1 million in the first quarter. Turning to our outlook, based on recent performance and the positive impact from our brand initiatives we have in place, we are raising our full-year net revenues outlook to -2% to +2% as compared to 2023 and versus prior guidance of down 5% to flat. As a reminder, we expect Q3 to be the toughest year-over-year comparison in terms of net revenues growth, primarily due to the anniversary of last year's highly successful sample sale in September. Our gross margin outlook for the year is unchanged and expected to be in line with our 2023 gross margin rate. We are committed to enhancing product innovation through new fabrications, advanced features, and designs tailored to meet the needs of healthcare professionals with premium products at exceptional value, which may impact gross margin rate in the short term, but we are confident that we will drive higher margin long term. First, as we expand and diversify our fabrications and product categories, we anticipate realizing economies of scale over time, subsequently mirroring the margin trajectory delivered by our core scrubwear and FIONx lines over the years. And second, we expect new innovation to also drive our higher margin core business. Also note that we expect the duty drawback benefit anticipated for later this year to offset some of the headwind from new product innovation. Turning to selling expense, total transitory costs associated with our fulfillment enhancement project are now estimated to be approximately $13 million, slightly below our previous expectation of $14 million. We expect to realize the bulk of these transitory expenses in the second quarter. Note that a portion of fulfillment costs that we assume would fall in the first quarter shifted to the second quarter. We anticipate the transition to be largely complete by the end of the third quarter. With respect to marketing spend, we plan to increase our investment as a percentage of net revenues as we build on our momentum. The majority of the higher investment will be incurred in the third quarter, coinciding with a large-scale brand campaign. With respect to G&A, we plan to maintain investments in key areas of our business, particularly in talent, while carefully managing expenses to identify savings opportunities. As a result of these factors, adjusted EBITDA margin for full year 2024 is now expected to be between 9.5% and 10.5%. This reflects approximately 220 basis points of cost headwind from the transitory portion of our fulfillment project. Turning to our second quarter 2024 outlook, we expect net revenues growth of between 3% and 4%. We expect gross margin to be down versus Q2 last year, largely due to a product mix shift. Importantly, while there may be fluctuations in the short term, we aim to maintain a healthy margin rate while also making the right investments in our long-term growth. Looking at operating expenses, for selling expense, we expect deleverage of approximately 330 basis points, which takes into account higher transitory and ongoing fulfillment costs. As a result, we expect second quarter Adjusted EBITDA margin to be approximately 8.5%. Our capital expenditures expectation for 2024 continues to be between $18-$19 million, including $13-$14 million in fulfillment enhancement-related costs. In closing, we're delighted to see the positive trends in our business. Moving forward, we'll continue to capitalize on our robust balance sheet and cash flow dynamics to strategically invest in our future growth. With that, I will turn it over to the operator to kick off our Q&A session. Operator. We will now begin our question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. We'll pause briefly here as questions are registered. Our first question comes from Brian Nagel with the company Oppenheimer. Brian, your line is now open. Hi, good afternoon. First off, congratulations on the pickup in your business lately. Thanks, Brian. So the first question I want to ask just with regard to the, I guess, the adjustments to the guidance and then the discussion around the investments there. So the question is, the way I want to ask it is, as we think about, so you're taking revenue guidance up, but EBITDA margin guidance down. So are these incremental investments? Are you looking at them more as a kind of a shorter-term dynamic to capitalize upon this improving trend, or is this something that's going to basically change the cost of doing business for FIGS over a longer period of time? Sure. Thanks, Brian. So I think, as you know, the fundamentals of our business have always been highly attractive. At the center of that is the metric of repeat frequency. By the nature of what we sell, uniforms, and who we sell to, healthcare professionals, we naturally benefit from frequent replenishment. And so we saw in the second half of March going into Q2, we saw these trends improve. And we really are attributing that to strong engagement around our product launches combined with the marketing campaigns that we've put out that have all been centered around the healthcare community. And so that is where we're seeing the dynamic shift and why we're increasing our revenue guidance for the year. We are being prudent given it's still early days. And we're seeing this dynamic working between product and marketing coming together. We're investing behind that, and that's where you see the EBITDA guidance. We're bringing that down, and that can be almost fully attributed to this increase in brand marketing spend that very much is a short-term dynamic as we continue to invest in what's working, as we continue to scale and build the business to $1 billion and beyond. Got it. That's helpful, Trina. Then the second question I have just on the gross margin. So I guess gross margin track is a little bit weaker than the forecasts out there. You're guided to be down, but you talked about the product mix shift. Was that a shorter-term dynamic too, or is that something we should expect to persist? So as we shift into building out our categories, building out fabrications, in addition to raising the bar on quality as it relates to our features and trims, there may be some higher product costing associated with that. But it's really a short-term dynamic because, as you've seen with FIONx, with our core scrubwear over the years, we get economies of scale over time. And so we look to see that in our new innovation. We look to see a similar margin curve over time that we saw with core scrubwear. And so it's all about balancing and gaining leverage from that core to invest in the future of the business, invest in innovation. And so the gross margin this year and beyond, that's kind of how we think about it. Got it. Appreciate it. Thank you. Yep. Thank you. Our next question comes from Rick Patel with the company Raymond James. Rick, your line is now open. Thanks. Good afternoon and well done on the new innovation here. I'm hoping you can provide some additional color on the shape of revenue growth that you gave. So can you help us with the building blocks for how that growth is achieved as we think about growth in active customers versus frequency and AOV? Sure. So as you've seen, we've had a number of gains from let's start with AOV. AOV was $94 in 2019. We finished this last quarter at $116. That's a function of both AUR and UPT. So AUR is driven by really building out our layering system. You're seeing footwear, outerwear, FIGS Pro all have higher retail MSRP. And so that's driving AOV growth as well as UPT. And just to add to this, I think it's really important to note that the innovation is a key piece to this. Our limited edition scrubwear has doubled in the past year. And our non-scrubwear was 18.6% of the business last year. It's 20.5% as of this past quarter. And so really seeing innovation, really seeing this diversification across category to move beyond an e-comm scrubs business. We're diversifying by category, by fabrication, diversifying by channel and geography. And all of that is really important as we aim to be an iconic brand over the next 100 years. As it relates to the guide, there'll be a modest increase from an active customer perspective, and it actually assumes repeat is down. And so we are being prudent as we're seeing some gains there. Great. And can you also talk about the potential to chase demand for the innovation that is working? I know inventory is down 28%, and it's where you want it to be overall, but do you have the right inventory to meet the demand for the newer products that you've launched? Yeah. We feel really good about our inventory balance. As you know, we've made incredible strides over the last year, down 28% year-over-year, and it will continue to decline on a year-over-year basis every quarter through the end of the year. We do feel like we have the right inventory across our core, across our limited edition styles, across our pinnacle pieces that have come in. It's been. I don't know if you saw our Indestructible capsule launch. It's killer. So really exciting things to come. I think that, but we're nimble, right? We've seen a number of key launches in the first quarter: our Sherpa Bomber, our scrub legging, our wide-leg pants. There's a number of pieces I can't say right now because if our healthcare professionals are listening, they'll get too excited. But we're chasing. We're nimble. We're adjusting as we see that demand. We're adjusting as we see that excitement. Appreciate the details. Thank you. Thank you. Thank you. Our next question comes from Lorraine Hutchinson with the company Bank of America. Lorraine, your line is now open. Thank you. Good afternoon. I just wanted to follow up on the brand marketing increase that you're doing in the third quarter. Trina, you spoke earlier about it being a shorter-term dynamic. So when we think about 2025 and 2026, should we expect marketing to come back down, or would you expect to be growing revenue sufficiently to just have that cost percentage decline naturally? So what I'll say is that we're really making this brand investment intentionally. We're focusing on the spend, on what's working. We're seeing the new customers. We're seeing these improved frequency trends. So we're leaning in. And we believe that this is going to drive higher growth, paving the way for long-term profitability. We are a growth company. 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 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's 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 leads 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. As we go into 2025 and 2026, we'll update you as we go. Thank you. Thank you, Lorraine. Our next question comes from Ashley Owens with the company KeyBanc Capital Markets. Ashley, your line is now open. Hi. Thanks for taking my question. This is Chand 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? 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. 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. 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 it's at a more normalized level? So how are you thinking about that? 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. Awesome. Thank you. Thank you, Ashley. Our next question comes from Nathan Feather with the company Morgan Stanley. Nathan, your line is now open. 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 through the thought process there, what kind of uplift it generated. And then do you expect the one-queue sample sale you ran to pull forward any demand from two-queue similar to the prior sample sale in the back half of last year? Thank you. So we do a sample sale once a year, and we don't look at comp period over period, right? 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's what that was about. I don't believe also, just given what we're seeing in the trends, that there's going to be a pull forward into Q1 from Q2. Great. Thank you. Thank you, Nathan. Thank you. Our next question comes from Matt Koranda with the company Roth MKM. Matt, your line is now open. 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 subsegments among your healthcare professionals. So we've really seen that improvement coming from the repeat frequency, right? It's active customers. It's customers that have lapsed 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 of bringing true innovation combined with impactful storytelling and that working. We believe, and we've always seen in this business, that repeat drives new. 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. They're in densely populated institutions acquiring customers for us. So as that repeat frequency continues, we'll see kind of the new kind of come behind it. And you asked about geography. We've seen strong frequency and reactivation in both the United States as well as in our international markets. 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. 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 flat-ish gross margin for the year. So all of the incremental EBITDA margin cut is essentially coming from the marketing line? That's correct. Gross margin relatively flat year-over-year. 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. Okay. Thank you. I'll leave it there. Thank you, Matt. Our next question comes from Dana Telsey with the company Telsey Group. Dana, your line is now open. Hi. Good afternoon, everyone. Trina, as you think about the product mix shift that is ongoing, 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 pickup of momentum? Is it a product category that you're seeing with that momentum improving? Thank you. 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 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 scrubwear. And 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 freight, fulfillment, and marketing. And while product margins at the beginning are a bit lower on paper, the order economics really do offset that. 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 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're doing and celebrate them and just put them on a pedestal, which is literally what we did. 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. Got it. Any learnings from the retail store, and when does Philadelphia open? Oh, the retail store. So the store has been great. 40% of our community that is purchasing within the store are new customers. And this is in our most penetrated market of Los Angeles, so that's great to see. Healthcare professionals are like everybody else, right? 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 got to come. Okay. Thank you very much, and nice to see the progress. Thank you. Thank you, Dana. Our next question comes from Bob Drbul with the company Guggenheim. Bob, your line is now open. Hi. Good afternoon, everyone. I guess, Trina, I was just wondering if you could talk more about sort of 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? 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 professionals, that it's starting to turn a corner. And more generally, we've spoken about some of the systemic issues with healthcare professionals. We 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 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. Thank you. Thanks, Bob. Thank you, Bob. Our next question comes from Brooke Roach with the company Goldman Sachs. Brooke, your line is now open. 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 U.S. 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? So I think what we've seen with the innovation is that it's not only driving 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: 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. And 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? Just whether or not that consumer is engaging more at full price or if more of these green shoots have been driven by promotional moments. Oh, 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 it's exciting to see that engagement level isn't just coming during those moments. Great. And then just finally for me, can you help us break down the growth expectation that you have between your international and your U.S. business for both 2Q and the full year given the updated guidance forecast? Brooke, I would love to give it to you, but everyone's telling me I can't. So we don't break that out, but international continues to grow phenomenally well. And I would just take out the duty reclass when you look at that international growth to give you the full picture of that. But we're really excited about not only what we're seeing internationally. From a U.S. standpoint, a lot of what we're seeing in terms of repeat frequency is that engagement around our storytelling and engagement around big brand moments. And so that's why we're continuing to invest. It really is in that U.S. customer. Great. Thanks so much. I'll pass it on. Thank you, Brooke. Our next question comes from John Kernan with the company TD Cowen. John, your line is now open. Good afternoon. Thanks for taking the question. Trina, you talked a lot about TAM back during the IPO process. Wondering how your view of addressable markets evolved and how your share is progressing as we get through 2024. John, I knew the TAM question would come from you, but I'm glad to see it. So we feel really good about our ability to continue to penetrate the healthcare apparel market. It's an $80 billion market globally. It's $12 billion in the United States. And we're doing over $500 million in sales. There's a lot of runway ahead of us. And you see that in the international growth, and you see that actually in the Teams' growth, which we haven't talked about yet, but it's really exciting to see that business continue to scale. And then I do think, and we've talked about this, we're creating TAM. Non-scrubs is essentially mostly TAM creation. And so having that be over 20% of our business is a great sign that, yes, there's the scrubs market, but we are innovating every day. I would say a large portion of what we're doing, even within scrubs, is not in that TAM. So we very rarely speak about TAM here because innovation changes TAM, and that's what we're looking to do. Understood. Thanks. Kevin, I think you said the fulfillment investments this year are a 220 basis point headwind. How do you recover that margin over time? What type of top-line growth does it need? And what are the returns that you expect to generate off this investment? Thanks. So John, all of that investment is transitory. So those 220 basis points is all the transitory costs of having two facilities open at the same time as we move to our new facility. So that will all go away next year. Got it. All right. Thank you. Yeah. Thank you, John. Our next question comes from Angus Kelleher with the company Barclays. Angus, your line is now open. Hi. This is Angus on for Adrienne Yih. Thanks for taking my question. What are some of the long-term opportunities on the selling expense line as a result of the fulfillment center shift and change in fulfillment partner? And at what point do you start leveraging those? Is it a function of time, or do you need a certain amount of international revenue to get there? So we feel really good about moving to our new facility. There's a number of things that this is going to help us do to create a better experience for our customers, higher reliability, and really set us up from a to your point, as we scale, we're going to gain leverage, right, from this new facility. It's really tech-enabled. There's a ton of robotics. And so as we move beyond our sales today, we're set up to drive meaningfully much bigger business in this facility. From an international perspective, we've talked about our Q1 timing as it relates to opening up a Canadian facility. And so not only is this facility in and of itself something that we're going to gain leverage from over time, it's also setting us up to build a global network of distribution. And so this is an exciting start as we really look to make it very easy to get your package. You shouldn't have to wait more than 2-3 days, right? And so how do we do that on a global level? This is setting us up to really ensure that it's fast, it's convenient, it's reliable, and you get what you need to go to your job and do it well. Great. Thank you. And I guess just secondly, curious if you could talk about the and this is kind of a follow-up on Brooke's question. Curious if you could talk about the performance spread between rest of world and U.S. in 1Q given the rest of the world growth was outpacing the U.S. pretty meaningfully. So I guess what's working in those international markets that maybe isn't resonating as well in the U.S.? Thank you. Sure. I mean, so it's really different strategies, right? The rest of the world, we're really leaning into bringing on new healthcare professionals. There are 140 million healthcare professionals around the world, and many of them, it was similar to the U.S. in that they had these baggy, boxy, ill-fitting scrubs, and it was just awful. And so really, first off, getting them to know what FIGS is, entering these markets, and localizing from a translation, speaking their language, from a currency standpoint, from a site experience standpoint, from merchandising the product that makes the most sense for them based on where they live, really understanding their holidays and how they want to engage with FIGS. And so that's been a huge highlight from an international perspective and something that we're even still early days on. I mean, there's a number of countries that we haven't even fully translated into their language. So it's a lot of opportunity. From a U.S. perspective, we really are encouraged by what we've seen with our product launches driving people back with our campaigns and our storytelling, engaging this community in deeper ways. And there's a whole part of this country that doesn't just like international, doesn't yet know about FIGS. And so how are we bringing new healthcare professionals into the FIGS family is a huge focus for us. But we believe that the big tentpole brand moments is really how we're going to get that awareness both in the U.S. and globally coupled with localizing internationally. That's our strategy. Thank you. Thank you, Angus. There are no additional questions waiting at this time. I would like to pass the conference over to Trina Spear for closing remarks. Thank you for joining us. It's great speaking with you all, and I look forward to speaking with you next quarter. That concludes the FIGS first quarter fiscal 2024 earnings conference call. Thank you for your.