Lulu's Fashion Lounge Holdings Inc (LVLU) 2023 Q3 法說會逐字稿

Good afternoon, and welcome to Lulu's third quarter 2023 earnings conference call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Lulu's General Counsel and Corporate Secretary, Naomi Beckman-Straus. Thank you. You may begin.

下午好，歡迎參加 Lulu 2023 年第三季財報電話會議。今天的電話會議正在錄音，我們分配了一小時準備發言和問答。這次，我想將會議轉交給 Lulu 的總法律顧問兼公司秘書 Naomi Beckman-Straus。謝謝。你可以開始了。

Good afternoon, everyone, and thank you for joining us to discuss Lulu's Third quarter 2023 results. Before we begin, we would like to remind you that this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

大家下午好，感謝您加入我們討論 Lulu 2023 年第三季業績。在開始之前，我們想提醒您，本次電話會議將包含 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述。

All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including, but not limited to statements regarding management's expectations, plans, strategies, goals and objectives and their implementation, our expectations around the continued impact of the macroeconomic environment, consumer demand and return rates on our business, our future expectations regarding financial results, references to the year ending December 31, 2023, including our financial outlook for full year 2023, market opportunities, product launches and other initiatives and our growth.

本次電話會議中所做的所有與歷史事實無關的陳述均應被視為前瞻性陳述，包括但不限於有關管理層的期望、計劃、戰略、目的和目標及其實施的陳述，我們對持續發展的期望。宏觀經濟環境、消費者需求和回報率對我們業務的影響、我們對財務業績的未來預期、截至2023 年12 月31 日的年度參考，包括我們對2023 年全年的財務展望、市場機會、產品發布和其他舉措以及我們的成長。

These statements, which are subject to various risks, uncertainties, assumptions and other important factors could cause our actual results, performance or achievements to differ materially from results, performance, or achievements expressed or implied by these statements. These risks, uncertainties and assumptions are detailed in this afternoon's press release as well as in our filings with the SEC, including our annual report on Form 10-K for the fiscal year ended January 1, 2023, filed with the SEC on March 14, 2023, all of which can be found on our website at investors.lulus.com.

這些陳述受到各種風險、不確定性、假設和其他重要因素的影響，可能導致我們的實際結果、績效或成就與這些陳述明示或暗示的結果、績效或成就有重大差異。這些風險、不確定性和假設在今天下午的新聞稿以及我們向SEC 提交的文件中進行了詳細說明，其中包括我們於3 月14 日向SEC 提交的截至2023 年1 月1 日財年的10- K 表格年度報告， 2023 年，所有這些都可以在我們的網站 Investors.lulus.com 上找到。

Any such forward-looking statements represent management's estimates as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, we undertake no obligation to revise or update any forward-looking statements or information except as required by law.

任何此類前瞻性陳述均代表管理階層截至本次電話會議之日的估計。雖然我們可能選擇在未來某個時候更新此類前瞻性陳述，但我們不承擔修改或更新任何前瞻性陳述或資訊的義務，除非法律要求。

During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin, net cash debt, and free cash flow. We use non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP.

在今天的電話會議中，我們還將參考某些非 GAAP 財務信息，包括調整後 EBITDA、調整後 EBITDA 利潤率、淨現金債務和自由現金流。我們在一些財務討論中使用非公認會計準則衡量標準，因為我們相信它們更準確地代表了我們業務的真實營運績效和基本結果。非公認會計原則財務資訊的列報不應被孤立地考慮，也不能被視為替代或優於根據公認會計原則準備和列報的財務資訊。

Our non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliation of GAAP to non-GAAP measures as well as the description limitations and rationale for using each measure can be found in this afternoon's press release and in our SEC filings.

我們的非公認會計準則衡量標準可能與其他公司使用的非公認會計準則衡量標準不同。 GAAP 與非 GAAP 衡量標準的協調以及描述限制和使用每項衡量標準的理由可以在今天下午的新聞稿和我們向 SEC 提交的文件中找到。

Joining me on the call today are our CEO, Crystal Landsem; our CFO, Tiffany Smith; and our President and CIO, Mark Vos. Following our prepared remarks, we'll open the call for your questions.

今天和我一起參加電話會議的是我們的執行長 Crystal Landsem；我們的財務長蒂芙尼‧史密斯；還有我們的總裁兼資訊長 Mark Vos。在我們準備好的發言之後，我們將開始電話詢問您的問題。

With that, I'll turn the call over to Crystal.

這樣，我會將電話轉給克里斯托。

Thank you, Naomi, and good afternoon, everyone. We appreciate you joining us today. Before we delve into our results, I'd like to thank our team for their steadfast commitment and nurturing our brands and delivering an exceptional experience to Lulu's fans.

謝謝內奧米，大家下午好。我們感謝您今天加入我們。在我們深入研究我們的結果之前，我要感謝我們的團隊的堅定承諾、培育我們的品牌以及為露露的粉絲提供卓越的體驗。

I'll begin with a recap of our third quarter results, followed by highlights of important growth and efficiency initiatives that we believe will strengthen the company's long-term financial success and brand expansion. Setting macro headwinds aside for a moment, as we reflect on our performance in the third quarter, there are things we did well and things we needed to adjust to position us for sustained long-term success.

我將首先回顧我們第三季的業績，然後重點介紹重要的成長和效率舉措，我們相信這些舉措將加強公司的長期財務成功和品牌擴張。暫時將宏觀阻力放在一邊，當我們反思第三季的業績時，我們發現有些事情做得很好，有些事情我們需要調整，以便為我們的持續長期成功做好準備。

Let's jump into the things that we did well in the quarter. Our new product introductions continue to resonate with our customer during the quarter. With single to double digit positive net revenue comps across many product classes, including wedding related apparel, most dress classes, as well as a few other smaller, but growing product classes resulting in our total new product net revenue for the quarter comping up high single digits compared to Q3 last year, giving us further confidence in our future reorder funnel.

讓我們來看看本季我們做得好的事情。本季我們推出的新產品持續引起客戶的共鳴。許多產品類別的淨收入為個位數到兩位數的正數，包括婚禮相關服裝、大多數禮服類別以及其他一些較小但不斷增長的產品類別，導致我們本季度的新產品總淨收入達到高點與去年第三季相比，這讓我們對未來的再訂購管道更加充滿信心。

Of the previously mentioned growth product classes, we're most proud of reaccelerating growth metrics across leading special occasion and event apparel with new products, net revenue growth of high double digits over Q3 last year. New technologies and investments in site experience across the website, mobile app, and mobile web resulted in increased engagement metrics across all device platforms.

在前面提到的成長產品類別中，我們最自豪的是，領先的特殊場合和活動服裝透過新產品重新加速了成長指標，淨收入比去年第三季實現了兩位數的高成長。跨網站、行動應用程式和行動網路的新技術和網站體驗投資提高了所有裝置平台的參與度指標。

We successfully reduced our revolving line of credit by $4 million as intended and decreased our net debt by approximately $10.9 million, ending the quarter in a net cash positive position. Our business continues to generate liquidity, and our balance sheet remains strong, enabling us to maintain our investments in strategic initiatives, and sustainable long-term growth.

我們成功地將循環信貸額度按計劃減少了 400 萬美元，並將淨債務減少了約 1,090 萬美元，本季結束時淨現金為正。我們的業務持續產生流動性，我們的資產負債表依然強勁，使我們能夠維持對策略性舉措的投資和可持續的長期成長。

Free cash flow for the quarter was $11.6 million compared to prior year Q3 at $4.6 million. Year to date free cash flow is $18.2 million compared to year-to-date 2022, $12.6 million, reinforcing the agility of our business model. Inventory balances continued to decline with a balance at quarter end of $41.5 million, down about $7.9 million or 16% from the same period last year and down $4.7 million or 10% on a quarterly sequential basis due to efficient inventory management.

本季自由現金流為 1,160 萬美元，去年第三季為 460 萬美元。年初至今的自由現金流為 1,820 萬美元，而 2022 年年初至今為 1,260 萬美元，增強了我們業務模式的靈活性。庫存餘額繼續下降，季末餘額為 4,150 萬美元，比去年同期減少約 790 萬美元，即 16%，由於高效的庫存管理，環比減少 470 萬美元，即 10%。

Transitioning to challenges we saw during the quarter, where there were key learnings from the team. First, as our customers look more towards newness and novelty consistent with broader retail trends. We did not capture demand fully in the third quarter due to our conservative initial test order quantities being too small compared to the demand for many of the products we introduced during the quarter.

過渡到我們在本季看到的挑戰，團隊學到了重要的經驗教訓。首先，我們的客戶更加重視與更廣泛的零售趨勢一致的新鮮感和新穎性。由於我們保守的初始測試訂單數量與我們在本季度推出的許多產品的需求相比太小，因此我們在第三季度沒有完全捕獲需求。

Given the consumer health and macroeconomic headwinds facing many retailers, we have been more conservative in our initial product buys and warranted, resulting in less than optimal use of our highly effective buying model and leaving potential revenue opportunities untapped in the quarter.

考慮到許多零售商面臨的消費者健康和宏觀經濟逆風，我們在初始產品購買和保​​證方面更加保守，導致我們的高效購買模式未能得到最佳利用，並導致本季度潛在的收入機會未被開發。

Second, in response to shifting consumer behavior during the quarter, we reallocated resources from planned performance marketing investments towards markdowns and promotional pricing in order to compete for some of this demand. We attribute pressure from our promotional pricing to the general elevated promotional retail environment and intensified price competition from aggressive fast fashion retailers seeking to expand their presence in the US.

其次，為了因應本季消費者行為的變化，我們將資源從計畫的績效行銷投資重新分配給降價和促銷定價，以爭取部分需求。我們將促銷定價帶來的壓力歸因於普遍較高的促銷零售環境以及尋求擴大在美國業務的激進快時尚零售商的激烈價格競爭。

Third, we are experiencing a shift back to pre-pandemic levels in the lifespan of our reorder products. Over the last few years, catalyzed by the pandemic, we have benefited from extended lifespans of our reorder products with many products maintaining high productivity for two to three years longer than normal. More recently, we've realized we need to return to the multiyear reorder buying strategy that was successful pre pandemic.

第三，我們的再訂購產品的生命週期正在回到疫情大流行前的水平。過去幾年，在疫情的推動下，我們的再訂購產品的使用壽命得到了延長，許多產品保持高生產率的時間比正常情況長了兩到三年。最近，我們意識到我們需要回到大流行前成功的多年重新訂購購買策略。

This reversion was most apparent in the third quarter, where we saw softening demand in some of our legacy high-volume reorder products. While still productive and selling at healthy volume, demand for these products are tapering sooner than expected.

這種逆轉在第三季最為明顯，我們看到一些傳統的大量再訂購產品的需求疲軟。儘管生產力和銷售仍然良好，但對這些產品的需求正在比預期更快地減少。

Our business model is built around testing and prioritizing timeless quality versus being excessively trend-driven, which sets us up to effectively capitalize on the middle of a fashion cycle. Consequently, that can take a few quarters to test and optimize for shifting consumer preferences for more enduring and lasting trends, leaving us more exposed at the beginning and the end of a fashion cycle shift.

我們的商業模式是圍繞著測試和優先考慮永恆的品質而不是過度趨勢驅動而建立的，這使我們能夠有效地利用時尚週期的中期。因此，可能需要幾個季度的時間來測試和優化消費者偏好的轉變，以獲得更持久和持久的趨勢，使我們在時尚週期轉變的開始和結束時面臨更多的風險。

With reorder product lifecycles returning to averages more consistent with longer-term historical levels we've seen, we're confident about our ability to deliver a recalibrated reorder strategy going forward.

隨著再訂購產品生命週期恢復到與我們所看到的長期歷史水平更加一致的平均水平，我們對未來提供重新校準的再訂購策略的能力充滿信心。

Fourth, we saw a delay in the demand for fall products similar to trends we experienced in the spring. Demand for fall products only recently started to gain momentum, leaving our separate and shoes business which typically drive a larger impact in third and fourth quarter revenue, falling short of our original expectations. While we did not effectively anticipate the seasonal weather shifts, we have reinforced our internal planning and operating procedures to better address these shifts going forward.

第四，我們看到秋季產品的需求出現延遲，與春季的趨勢類似。秋季產品的需求最近才開始成長，這使得我們的獨立鞋類業務通常對第三季和第四季的收入產生更大的影響，低於我們最初的預期。雖然我們沒有有效預測季節性天氣變化，但我們加強了內部規劃和操作程序，以更好地應對未來的這些變化。

Lastly, we believe shoppers are currently craving more out-of-home in-person experiences than has been the case for the last few years, causing what we believe to be temporary headwinds for us as a primarily D2C retailer. While this may be temporarily limiting the extent of our customer engagement and acquisition opportunities, we remain confident in our D2C positioning and approach while remaining opportunistic with our test, learn, and reorder approach to other physical retail channels.

最後，我們認為，與過去幾年相比，購物者目前渴望更多的戶外親身體驗，這對我們作為主要 D2C 零售商來說是暫時的阻力。雖然這可能會暫時限制我們的客戶參與和獲取機會的程度，但我們對 D2C 定位和方法仍然充滿信心，同時對其他實體零售通路的測試、學習和重新訂購方法保持機會主義。

The end result was our financial results deviated from our initial projections. Net revenue was $83.1 million for the third quarter 2023, representing a 21% decline compared to Q3, 2022. Our adjusted EBITDA was $1 million for the third quarter 2023 compared to $5.4 million in Q3, 2022. Our active customer count was 3 million at the end of Q3 2023, down 4% sequentially from Q2, 2023, and down 8% from Q3 last year.

最終結果是我們的財務表現偏離了我們最初的預測。 2023 年第三季的淨收入為8,310 萬美元，與2022 年第三季相比下降21%。2023 年第三季調整後的EBITDA 為100 萬美元，而2022 年第三季為540 萬美元。我們的活躍客戶數量為300 萬。截至 2023 年第三季末，較 2023 年第二季季減 4%，較去年第三季下降 8%。

We are actively pursuing strategic initiatives and optimization efforts to drive efficiencies in the near term, while also laying the groundwork and making key investments so that we are well positioned to drive growth for the long term. These are a few of the actions we are taking in response to our Q3 insights. We will be reimplementing a tier-based approach to our initial order quantity purchasing strategy for a subset of our new product tests, more data supports higher confidence, and larger initial order quantities.

我們正在積極推行策略性舉措和優化工作，以在短期內提高效率，同時奠定基礎並進行關鍵投資，以便我們為推動長期成長做好準備。這些是我們根據第三季的見解而採取的一些行動。我們將針對新產品測試的一部分重新實施基於層級的初始訂單數量採購策略，更多資料支援更高的置信度和更大的初始訂單數量。

While the increases will remain conservative and consistent with our test-and-learn approach, we expect to reduce the occurrence of stock-outs, capture demand from initial test orders, and increase customer satisfaction. We believe a subset of our customers across all income levels have shifted spend to low priced aggressive fast fashion retailers who have recently been gaining traction with US consumers. We will be increasingly focusing our assortment and marketing efforts around an offering that is further differentiated from the fast fashion retailers.

雖然成長將保持保守並與我們的測試和學習方法保持一致，但我們預計將減少缺貨的發生，捕獲初始測試訂單的需求，並提高客戶滿意度。我們相信，所有收入水平的部分客戶已將支出轉向低價、進取的快時尚零售商，這些零售商最近受到了美國消費者的青睞。我們將越來越多地將我們的品類和行銷工作重點放在與快時尚零售商進一步區分開來的產品上。

Additionally, in anticipation of retiring aging reorder products sooner, we will be increasing our newness and novelty penetration back to pre-pandemic levels, but we have already seen encouraging performance from our test-and-learn orders.

此外，由於預計老化的再訂購產品會更快退役，我們將把新穎性和新穎性滲透率提高到大流行前的水平，但我們已經從測試和學習訂單中看到了令人鼓舞的表現。

Finally, we will be making measured investments in our merchandising leadership, expanding expertise specifically in separates and non-event apparel, shoes and accessories, as well as elevating experience and merchandising strategy across multiple customer interaction points. Alongside our optimization initiatives, our focus extends to new customer acquisition and engagement strategies that unlock fresh opportunities for visibility and growth and further support our core D2C business.

最後，我們將對我們的銷售領導力進行有節制的投資，擴大特別是在單品和非活動服裝、鞋子和配件方面的專業知識，並提升跨多個客戶互動點的體驗和銷售策略。除了我們的優化措施之外，我們的重點還擴展到新的客戶獲取和參與策略，這些策略可以釋放新的可見性和成長機會，並進一步支持我們的核心 D2C 業務。

As we approach 2024, we remain committed to offering innovative means for customers to interact with our brand, which is driven by customer insights, indicating their desire for additional channels to connect with us. To that end, we are excited to welcome customers to our new retail location on Melrose Avenue in Los Angeles this December, where they will be greeted with an immersive brand experience that we believe showcases Lulu's exceptional product quality and unparalleled customer service.

隨著 2024 年的臨近，我們仍然致力於為客戶提供與我們品牌互動的創新方式，這是由客戶洞察驅動的，表明他們渴望透過更多管道與我們建立聯繫。為此，我們很高興地歡迎顧客今年12 月來到我們位於洛杉磯梅爾羅斯大道的新零售店，在那裡他們將獲得身臨其境的品牌體驗，我們相信這展示了Lulu 卓越的產品品質和無與倫比的客戶服務。

Grand opening is scheduled for December 1, with brand activations planned in the week leading up to the opening. The launch timing positions us well for holiday events, with particular emphasis on dress and special occasion products for holiday and New Year's parties. Consistent with all our endeavors, we believe the test, learn and reorder approach also applies to physical retail, and this store will allow us to experiment with various brand engagement strategies in 2024, while we evaluate how to apply our fast-turning buying model to a brick and mortar experience.

定於 12 月 1 日盛大開業，並計劃在開業前一周進行品牌激活活動。推出時機使我們能夠很好地應對節日活動，特別是節日和新年派對的服裝和特殊場合產品。與我們所有的努力一致，我們相信測試、學習和重新訂購的方法也適用於實體零售，這家商店將使我們能夠在2024 年嘗試各種品牌參與策略，同時我們評估如何將我們的快速轉變的購買模式應用於實體零售。實體體驗。

On the wholesale partnership front, as highlighted on our Q2 call, our partnership with an online wholesale B2B platform broadened our product offerings for potential partners, deepening our reach into brick-and-mortar retail and attracting new customers through multichannel strategy. We're confident in our ability to facilitate wholesale growth with select retailers following our nearly seven years of wholesale partnerships with retailers such as Nordstrom and Stitch Fix. We believe wholesale relationships will provide a brand and customer halo effect that will deepen our relationships with our existing customers and introduce our brand to new customers, which will ultimately be accretive to our online presence.

在批發合作夥伴方面，正如我們在第二季度電話會議上所強調的那樣，我們與線上批發B2B 平台的合作擴大了我們為潛在合作夥伴提供的產品範圍，加深了我們對實體零售的影響力，並透過多通路策略吸引新客戶。在與 Nordstrom 和 Stitch Fix 等零售商建立了近七年的批發合作關係後，我們對促進精選零售商的批發增長的能力充滿信心。我們相信批發關係將提供品牌和客戶光環效應，從而加深我們與現有客戶的關係並向新客戶介紹我們的品牌，最終將增加我們的線上形象。

We will continue to be optimistic about brand enhancing wholesale partnerships to profitably boost awareness and in-person product experiences while leveraging existing infrastructure to maximize cost efficiency and build synergies between digital and physical channels. We'll continue to update you on our progress over the next several quarters as it relates to our growth initiatives.

我們將繼續對品牌增強批發合作夥伴關係持樂觀態度，以提高知名度和親自產品體驗，同時利用現有基礎設施最大限度地提高成本效率並在數位和實體通路之間建立協同效應。我們將繼續向您通報未來幾季與我們的成長計畫相關的進展。

In response to the temporary macro headwinds impacting our business and our softer year-to-date performance, we are adjusting our full year 2023 guidance to be more in line with our latest expectations. We are laser focused on adapting to the dynamic market changes, building the Lulu's brand, optimizing inventory turnover, and driving cost efficiencies to meet our near term targets and position ourselves for a return to positive growth trends and creating shareholder value.

為了應對影響我們業務的暫時宏觀逆風以及今年迄今表現疲軟的情況，我們正在調整 2023 年全年指引，以更符合我們的最新預期。我們專注於適應動態的市場變化、打造 Lulu 品牌、優化庫存週轉率和提高成本效率，以實現我們的近期目標，並為恢復積極成長趨勢和創造股東價值做好準備。

As noted last quarter, as we see our sales volumes recover, we expect to see reciprocal improvement in profit margins as our fixed costs begin to leverage. We are confident that the investments and actions we have taken and are taking now will position us well to emerge on a strong path to our goal of double-digit growth and profitability over the long term.

正如上季所指出的，隨著我們的銷售恢復，我們預計隨著我們的固定成本開始發揮作用，利潤率也會隨之提高。我們相信，我們已經採取和現在正在採取的投資和行動將使我們能夠走上實現長期兩位數成長和獲利目標的強勁道路。

We believe we are well equipped to reinforce our business with a healthy balance sheet, strong foundation, and strategic vision for our future. We remain optimistic about our calculated growth levers, and believe our long-term investment thesis is still intact. We believe that increasing brand awareness and attracting new customers, retaining and enhancing existing customer relationships, continuing category expansion, and expanding into new and existing channels to engage with our customer where she is, will return us to a path of double-digit revenue growth and EBITDA margins.

我們相信，我們有能力透過健康的資產負債表、堅實的基礎和未來的策略願景來加強我們的業務。我們對計算出的成長槓桿保持樂觀，並相信我們的長期投資論點仍然完好無損。我們相信，提高品牌知名度、吸引新客戶、保留和加強現有客戶關係、持續拓展品類、拓展新管道和現有管道與客戶互動，將使我們重回兩位數收入成長之路和EBITDA 利潤率。

Now I'd like to turn the call over to Mark Vos, our President and Chief Information Officer. He will share an update on key operational, technological and analytical efforts throughout the last quarter and currently underway. Mark?

現在我想將電話轉給我們的總裁兼資訊長 Mark Vos。他將分享上個季度和目前正在進行的關鍵營運、技術和分析工作的最新情況。標記？

Thank you, Crystal. First, I'd like to start by providing an update on our customer and how she interacted with us during the quarter.

謝謝你，水晶。首先，我想先介紹我們客戶的最新情況以及她在本季如何與我們互動。

New and repeat customer counts were down Q3 year over year with new customers coming in lighter than repeat customers during the quarter. Units per transaction on the other hand, was up sequentially from Q2 2023, and decreased only marginally compared to Q3 of last year. This was primarily the result of the shift from performance marketing spend towards markdowns and promotional pricing in response to the customer's bias towards promotional pricing during the quarter.

第三季新客戶和回頭客數量較去年同期下降，本季新客戶數量少於回頭客。另一方面，每筆交易的單位數比 2023 年第二季連續成長，與去年第三季相比僅略有下降。這主要是由於本季客戶對促銷定價的偏見，從績效行銷支出轉向降價和促銷定價的結果。

Despite increased promotions and markdowns, we saw slightly improved average unit retail at slightly lower units per transaction compared to Q3, 2022, resulting in a near identical $133 average order value compared to Q3, 2022. Although the active customer count declined year over year, the decline was less than our net revenue, meaning that at a comparable Q3 $133 average order value year over year, we were able to retain customers but with a slightly lower purchase frequency driven by, we believe, primarily discretionary income pressure experienced by our customers leading to more discerning purchase decision making.

儘管促銷和降價活動有所增加，但與2022 年第三季相比，我們發現平均零售量略有改善，每筆交易的單位數略有下降，因此與2022 年第三季相比，平均訂單價值幾乎相同，為133 美元。儘管活躍客戶數量同比下降，但下降幅度小於我們的淨收入，這意味著按第三季度133 美元的平均訂單價值同比計算，我們能夠留住客戶，但購買頻率略低，我們認為，這主要是由於我們的客戶所經歷的可自由支配的收入壓力而做出更明智的購買決策。

In reviewing the various customer household income segments purchasing behavior across the various price tiers. We did not see clear trading up or down. From a marketing perspective, we redirected a part of our performance marketing dollars towards markdowns and discounts to drive better conversion and inventory sell-throughs in various product classes and to manage the seasonal shifts.

在檢視不同客戶家庭收入群在不同價格層的購買行為時。我們沒有看到明顯的上漲或下跌交易。從行銷角度來看，我們將部分效果行銷資金用於降價和折扣，以推動各種產品類別更好的轉換和庫存銷售，並管理季節性變化。

Our primary focus remains on expanding brand awareness markets to keep overall marketing, efficacy, and spend as a percent of revenue within our targeted ranges to remain first order contribution margin profitable. This strategy allows us to introduce Lulu's to more consumers and improve the overall efficiency of our marketing investments, including the cost of new customer acquisition over the long term.

我們的主要重點仍然是擴大品牌知名度市場，以保持整體行銷、功效和支出佔收入的百分比在我們的目標範圍內，從而保持一階貢獻利潤率的利潤。這項策略使我們能夠將 Lulu's 介紹給更多消費者，並提高我們行銷投資的整體效率，包括長期獲取新客戶的成本。

With that point in Q3 2023, we continued the expansion of marketing investments in a more top of the funnel brand marketing and our influencer and ambassador generated brand reach, impressions, and earned media value to support Lulu's word of mouth marketing. Based on our social media and brand data tracking, we saw continued year-over-year gains in brand familiarity, including with GNC, which gave us confidence that we're on the right brand growth path.

從 2023 年第三季開始，我們繼續擴大對漏斗品牌行銷更頂端的行銷投資，我們的影響者和大使產生了品牌影響力、印象和贏得的媒體價值，以支持 Lulu 的口碑行銷。根據我們的社交媒體和品牌數據跟踪，我們看到品牌熟悉度（包括 GNC）逐年持續增長，這讓我們相信我們正走在正確的品牌成長道路上。

We see much growth potential ahead of us, especially fueled by dedicated brand marketing and communications resources with our new Senior Vice President of Brand Marketing and Vice President of Communications, who will continue to be on the offense and build out these programs consistent with a test-and-learn, data-driven approach used for everything we do at Lulu's.

我們看到了巨大的成長潛力，特別是在我們新的品牌行銷高級副總裁和傳播副總裁的專門品牌行銷和傳播資源的推動下，他們將繼續進攻並根據測試制定這些計劃我們在Lulu's 所做的一切都採用「邊學習、數據驅動」的方法。

Throughout 2023, we made strategic investments to improve the international shopping experience, resulting in less friction and improved conversion rates, which we expect will continue to improve over time as we test and iterate on their shopping experience.

2023 年全年，我們進行了策略性投資來改善國際購物體驗，從而減少摩擦並提高轉換率，隨著我們測試和迭代他們的購物體驗，我們預計轉換率將繼續提高。

In the third quarter, we were able to broaden our marketing reach abroad and have now seen year to date double-digit unit sales growth numbers in 12 out of the top 15 countries we've shipped to. And while it's still early days, and a small portion of our overall revenue, we are exploring more targeted efforts to share the Lulu's brands internationally, improving international search rankings and prudently testing the influencer and other paid active activations in select regions.

第三季度，我們擴大了海外行銷範圍，今年迄今為止，我們發貨最多的 15 個國家中，有 12 個國家的銷量實現了兩位數的成長。雖然現在還處於早期階段，而且只占我們總收入的一小部分，但我們正在探索更有針對性的努力，在國際上分享露露的品牌，提高國際搜尋排名，並在選定的地區謹慎測試影響者和其他付費活躍活動。

Notably, we launched an updated mobile app in September, which we're eager to build upon to drive customer engagement and retention. After the launch of the new app version, we have seen improvements in customer exit survey ratings and increases in conversion rate and average order value, leading to a meaningful increase in revenue per visit. By bringing app development in-house, We are not only better able to expand our customer insights, analytics, promotions and deep linking capabilities, but also to develop app-first and to app-only functionalities quicker.

值得注意的是，我們在 9 月推出了更新的行動應用程序，我們渴望以此為基礎來提高客戶參與度和保留率。新版本應用程式推出後，我們發現客戶退出調查評分有所提高，轉換率和平均訂單價值也有所提高，導致每次造訪收入顯著增加。透過將應用程式開發引入內部，我們不僅能夠更好地擴展我們的客戶洞察、分析、促銷和深度連結能力，而且還能夠更快地開發應用程式優先和僅應用程式的功能。

Moving on to product return behavior. We saw a slight increase in return rate compared to Q3, 2022, and a slight improvement in return rate over Q2, 2023. As mentioned in earlier commentary, we continue to embrace returns as we see returns as an opportunity to showcase more of Lulu's quality and value, gaining insights into our customers' style preferences and generally considered an integral part of the online shopping experience. That said, we are rolling out fit process changes with our vendor base, which we believe will contribute to enhancements in our fit and improved creating consistency of Lulu's branded products, affecting most Lulu's products by Q2, 2024.

繼續討論產品退貨行為。與2022 年第三季相比，我們看到退貨率略有上升，與2023 年第二季相比，退貨率也略有提高。正如先前的評論中提到的，我們繼續擁抱退貨，因為我們認為退貨是展示Lulu 更多品質的機會和價值，深入了解客戶的風格偏好，通常被認為是線上購物體驗不可或缺的一部分。也就是說，我們正在與我們的供應商群體一起推出適配流程變更，我們相信這將有助於增強我們的適配性並提高Lulu 品牌產品的一致性，到2024 年第二季影響大多數Lulu 的產品。

We also made improvements in the fit information displayed at the product level and continue to consider additional return policy enhancements to counter abusive increases in returns and the related costs.

我們還改進了產品層級顯示的合身訊息，並繼續考慮增強退貨政策，以應對退貨和相關成本的濫用增加。

From an operational perspective, in Q3, we further expanded our outbound shipping carrier network, which allowed us to offset some of the increases in outbound shipping costs by other carriers. To optimize margin, we are actively working to reduce return shipping costs across our network.

從營運角度來看，第三季度，我們進一步擴大了出境運輸承運人網絡，這使我們能夠抵消其他承運人增加的出境運輸成本。為了優化利潤，我們正在積極努力降低整個網路的退貨運輸成本。

Additionally, in Q3, automated order packing went live in our Northern California fulfillment center. And due to the learnings required from the automated order packing implementation in our Pennsylvania fulfillment center, the team quickly scaled to expected efficiency improvements. As a result of our order packing automation, our fulfillment order packing labor cost per unit has structurally decreased.

此外，第三季度，我們的北加州履行中心啟用了自動訂單包裝。由於從我們賓州履行中心實施自動化訂單包裝中學到的知識，該團隊迅速擴大規模，達到了預期的效率提高。由於我們的訂單包裝自動化，我們的每單位履行訂單包裝勞動成本已結構性下降。

Last but not least, our operations, customer support, data, marketing, and engineering teams has always have worked exceptionally hard to deliver superior customer experiences and are relentless in finding ways to drive down our unit costs. We are proud of everything the LuCrew has accomplished, and we would like to thank all LuCrew teams.

最後但並非最不重要的一點是，我們的營運、客戶支援、數據、行銷和工程團隊始終非常努力地提供卓越的客戶體驗，並不懈地尋找降低單位成本的方法。我們為 LuCrew 所取得的一切成就感到自豪，我們要感謝所有 LuCrew 團隊。

And now I'll hand you over to Tiffany Smith, Lulu's Chief Financial Officer, to deep dive into our financials.

現在我將把您交給 Lulu 的財務長 Tiffany Smith，讓您深入了解我們的財務狀況。

Thanks, Mark, and good afternoon, everyone. We consider the current macroeconomic pressures as temporary headwinds and acknowledge the impact of shifting consumer spending and purchase behavior on our third quarter results. Our net revenue of $83.1 million was down 21% year over year, falling short of our expectations for the quarter. The decline was primarily driven by a decrease in total orders of 19% compared to the prior year, as well as mark downs in return rates that were higher in the quarter. Our overall return rate in the third quarter was 50 basis points higher than the prior year, primarily due to product mix shifts and final sale ratios, it was 50 basis points lower on a sequential basis.

謝謝，馬克，大家下午好。我們認為當前的宏觀經濟壓力是暫時的阻力，並承認消費者支出和購買行為的變化對我們第三季業績的影響。我們的淨收入為 8,310 萬美元，年減 21%，低於我們對該季度的預期。下降的主要原因是訂單總數較前一年減少 19%，以及本季較高的退貨率下降。我們第三季的整體回報率比去年同期高出 50 個基點，主要是由於產品結構的變化和最終銷售比率，季減了 50 個基點。

Gross margins for the third quarter declined by about 180 basis points from the same period last year to 40.3%. Elevated markdown rates during the quarter drove the margin decline compared to prior year as our customers sought value and we leveraged more markdowns to move through spring and summer inventory that was heavier coming into the third quarter due to the late start to spring. We were more aggressive with markdowns on these products, resulting in a cleaner transition out of the third quarter from a spring and summer inventory perspective, which was approximately 40% lower compared to the prior year.

第三季毛利率較去年同期下降約180個基點至40.3%。由於我們的客戶尋求價值，本季降價率上升導致利潤率較上年下降，而我們利用更多降價來應對春季和夏季庫存，由於春季開始較晚，進入第三季度時庫存量更大。我們對這些產品進行了更積極的降價，從春季和夏季庫存的角度來看，第三季的庫存發生了更乾淨的轉變，與去年同期相比減少了約 40%。

Moving down the P&L to give some insights into expense line items. Q3, 2023, selling and marketing expenses were $16.8 million, down about $2.5 million from Q3, 2022, due to lower performance marketing spend and favorability in merchant processing fees, partially offset by higher brand awareness investments.

向下移動損益表以深入了解費用項目。 2023 年第三季度，銷售和行銷費用為1,680 萬美元，比2022 年第三季減少約250 萬美元，原因是績效行銷支出較低和商家處理費優惠，但部分被較高的品牌知名度投資所抵消。

As already noted, we invested more heavily in markdowns and discounts, which was offset with lower performance marketing spend. General and administrative expenses decreased by about $2.8 million to $21.6 million, a 12% decline compared to Q3, 2022. The decrease was primarily driven by a $2.6 million decrease in fixed and variable labor costs due to delayed hiring of fixed headcount as well as the impact of lower sales volume and increased operational efficiencies on our variable labor costs.

正如已經指出的，我們在降價和折扣方面投入了更多資金，但這被績效行銷支出的降低所抵消。一般及管理費用減少約 280 萬美元，至 2,160 萬美元，與 2022 年第三季相比下降 12%。這一下降主要是由於固定員工招聘延遲以及銷量下降和運營效率提高對我們可變勞動力成本的影響。

Interest expense for the quarter was approximately $400,000 compared to $300,000 in Q3, 2022. For the quarter, we reported a diluted loss per share of $0.10 which is a decrease of $0.12 compared to diluted earnings per share of $0.02 in the third quarter of 2022.

本季的利息支出約為40 萬美元，而2022 年第三季為30 萬美元。本季度，我們報告的攤薄每股虧損為0.10 美元，與2022 年第三季攤薄每股收益0.02 美元相比，減少了0.12 美元。

And finally, adjusted EBITDA for the third quarter was approximately $1 million compared to Q3, 2022 adjusted EBITDA of $5.4 million. Our Q3 adjusted EBITDA margin was 1.2% compared to 5.1% in the same period last year. Our balance sheet remains strong, and we believe we are still positioned well to execute our long-term growth plans and manage through the ongoing near term macro uncertainty.

最後，第三季調整後 EBITDA 約為 100 萬美元，而 2022 年第三季調整後 EBITDA 為 540 萬美元。第三季調整後 EBITDA 利潤率為 1.2%，而去年同期為 5.1%。我們的資產負債表仍然強勁，我們相信我們仍然能夠很好地執行長期成長計劃並應對持續的近期宏觀不確定性。

Our net cash provided by operating activities for the quarter was $12.7 million compared to $5.7 million in Q3 of 2022. We also generated $11.6 million in free cash flow in the quarter compared to $4.6 million in Q3 of 2022. We ended the quarter with cash of about $12.9 million with a balance of $11 million drawn on our revolver, resulting in a net cash balance of $1.9 million. We repaid $4 million of the revolver during the third quarter and plan to continue to pay it down through the end of the year.

本季營運活動提供的淨現金為1,270 萬美元，而2022 年第三季為570 萬美元。本季我們也產生了1,160 萬美元的自由現金流，而2022 年第三季為460 萬美元。本季度結束時，我們的現金約為 1,290 萬美元，其中左輪手槍餘額為 1,100 萬美元，淨現金餘額為 190 萬美元。我們在第三季償還了 400 萬美元的左輪手槍，並計劃繼續償還到年底。

Our inventory balance at quarter end was $41.5 million, down about $7.9 million from the same period last year and down $4.7 million on a quarterly sequential basis. During the third quarter, we meaningfully reduced the sales growth to inventory growth spreads, indicating that our inventories continue to be better aligned with our sales.

季度末我們的庫存餘額為 4,150 萬美元，比去年同期減少約 790 萬美元，季減 470 萬美元。在第三季度，我們有意義地降低了銷售成長與庫存成長的利差，這表明我們的庫存繼續與銷售更好地保持一致。

With respect to inventory, I would like to elaborate on some points that Crystal raised earlier in the call. Our seasonal transitions have proven to be challenging this year, which puts some pressure on gross margins in the third quarter and may pressure fourth quarter margins given the late start for sales of fall and winter products.

關於庫存，我想詳細說明克里斯托爾早些時候在電話會議中提出的一些觀點。事實證明，今年我們的季節性轉變充滿挑戰，這給第三季度的毛利率帶來了一些壓力，並且由於秋冬產品的銷售起步較晚，可能會給第四季度的利潤率帶來壓力。

That said, we ended the third quarter with lower fall winter inventory levels compared to Q3 of last year. Also note that approximately half of our inventory assortment is seasonless, which maintains relevance from season to season and can be sold year-round as it is not as impacted by seasonal transitions.

也就是說，與去年第三季相比，我們第三季末的秋冬庫存水準較低。另請注意，我們大約一半的庫存品種是無季節的，這保持了各個季節的相關性，並且可以全年銷售，因為它不受季節轉換的影響。

We are also seeing the impact of more accelerated fashion cycles, which may impact the lifespan of our reorder merchandise. As we've highlighted in prior quarters, our data-driven buying model results in roughly 70% of our buyers being reorder products.

我們也看到了時尚週期加速的影響，這可能會影響我們再訂購商品的使用壽命。正如我們在前幾季所強調的那樣，我們的數據驅動購買模式導致大約 70% 的買家重新訂購產品。

We remain confident in our buying model that centers around these proven sellers with lower markdown risks given the following points: first, there continues to be optimism around the new products that are resonating with our customer as these products will become the foundation for larger reorder programs in future quarters.

鑑於以下幾點，我們對以這些降價風險較低的成熟賣家為中心的購買模式仍然充滿信心：首先，人們對與我們的客戶產生共鳴的新產品仍然持樂觀態度，因為這些產品將成為更大的再訂購計劃的基礎在未來的幾個季度。

Second, our existing reorder inventory continues to be productive as evidenced by our still healthy inventory turns, which we believe are industry-leading. Furthermore, much of our seasonal reorder products is multi-season and can be brought back year after year, which means we are not forced into aggressive markdowns of this product at the end of the season, even if it is turning a bit slower than in the past.

其次，我們現有的再訂購庫存繼續保持高效，我們仍然健康的庫存週轉證明了這一點，我們認為這是行業領先的。此外，我們的許多季節性再訂購產品都是多季的，可以年復一年地回歸，這意味著我們不會被迫在季末對該產品進行大幅降價，即使它的銷售速度比往年慢一些。過去。

And lastly, as we've noted on prior calls, we are a fresh fashion concept, not a fast fashion business. We see an opportunity to evolve our business to further capture the newness and novelty our customers seem to desire, but we by no means intend to transition into a fast fashion buying model where short term unproven trends are chased.

最後，正如我們在之前的電話中指出的那樣，我們是一個新鮮的時尚概念，而不是一家快時尚企業。我們看到了發展業務的機會，以進一步捕捉客戶似乎渴望的新鮮感和新奇感，但我們絕不打算轉變為追逐短期未經證實的趨勢的快時尚購買模式。

Overall, we remain confident in our buying model and our continued ability to move through inventory levels in a way that minimizes gross margin risks and ultimately preserves brand integrity. As always, we aim to be disciplined in our inventory management approach and will continue to relentlessly pursue further optimization of inventory levels that balances the customer experience and minimizes markdown risk.

總體而言，我們對我們的購買模式以及我們以最小化毛利率風險並最終保持品牌完整性的方式持續調整庫存水準的能力仍然充滿信心。一如既往，我們的目標是嚴格庫存管理方法，並將繼續不懈地追求庫存水準的進一步優化，以平衡客戶體驗並最大限度地降低降價風險。

Moving on to guidance. With third quarter results below our expectations and continued choppiness early in the fourth quarter, we are tightening our full year 2023 guidance ranges. We will continue to take actions to manage costs, drive operational efficiencies, and make targeted investments to adapt to changing consumer behaviors.

繼續指導。由於第三季業績低於我們的預期，且第四季初持續波動，我們正在收緊 2023 年全年指引範圍。我們將繼續採取行動管理成本、提高營運效率並進行有針對性的投資，以適應不斷變化的消費者行為。

Our guidance anticipates that our customer will continue to be discerning with their spend through the balance of the year and reflects continued macroeconomic headwinds. We expect 2023 full year net revenues between $350 million and $360 million compared with the prior range of $355 million to $375 million.

我們的指導預計，我們的客戶將在今年餘下的時間裡繼續對他們的支出保持敏銳，並反映出持續的宏觀經濟逆風。我們預計 2023 年全年淨收入將在 3.5 億美元至 3.6 億美元之間，而先前的範圍為 3.55 億美元至 3.75 億美元。

We expect 2023 full year adjusted EBITDA to be between $4.5 million and $5.5 million compared with the prior range of $5 million to $10 million, reflecting the impact of a lower net revenue range. To set expectations for modeling purposes, our quarterly adjusted EBITDA margin rates have similar seasonality fluctuations in our net revenues and will likely fluctuate above or below our full year guidance rate depending on the quarter.

我們預計 2023 年全年調整後 EBITDA 將在 450 萬美元至 550 萬美元之間，而之前的範圍為 500 萬美元至 1000 萬美元，反映了淨收入範圍較低的影響。為了設定建模預期，我們的季度調整後 EBITDA 利潤率在我們的淨收入中具有類似的季節性波動，並且可能會根據季度的不同而波動高於或低於我們的全年指導率。

As we have noted previously, historically, Q4 has been our smallest revenue quarter as we are not a holiday gifting destination. As a reminder, as a result of paying down our long-term debt following the IPO, we incurred modest levels of interest expense associated with our revolver and equipment leases for our distribution facilities.

正如我們之前指出的，從歷史上看，第四季度是我們收入最小的季度，因為我們不是節日禮物目的地。提醒一下，由於在首次公開發行後償還了我們的長期債務，我們因分銷設施的左輪手槍和設備租賃而產生了適度的利息費用。

We anticipate interest expense for full year 2023 to be approximately $1.6 million, consistent with our previous outlook and an increase compared to 2022 levels, which reflects the impact of higher interest rates offsetting lower average revolver balances. As of today, we have $11 million drawn on our $50 million revolver. We plan to continue paying down our revolver and anticipate ending 2023 with a net debt balance of less than $4 million.

我們預計 2023 年全年的利息支出約為 160 萬美元，與我們先前的預期一致，並且比 2022 年的水平有所增加，這反映了較高的利率抵消了較低的平均循環餘額的影響。截至今天，我們已經從 5000 萬美元的左輪手槍中提取了 1100 萬美元。我們計劃繼續償還左輪手槍債務，預計到 2023 年底，淨債務餘額將低於 400 萬美元。

As a reminder, we anticipate that we will be able to maintain positive free cash flow for the full fiscal year as well as an increase over the previous year. We expect our stock-based compensation expenses and our weighted average fully diluted share count to be unchanged from what was reported last quarter.

提醒一下，我們預計整個財年我們將能夠保持正的自由現金流，並且比前一年有所增長。我們預計我們的股票薪酬費用和加權平均完全稀釋股數將與上季報告的持平。

Moving on to capital expenditures, we expect between $4.5 million and $5 million for the year compared with the previous range of $5 million to $6 million, which includes capital expenditures for our new retail store as well as other investments. We believe investing in our future growth opportunities, driving efficiencies, and enhancing the customer experience are key to our long-term success.

說到資本支出，我們預計今年的資本支出為 450 萬美元至 500 萬美元，而之前的範圍為 500 萬美元至 600 萬美元，其中包括新零售店的資本支出以及其他投資。我們相信，投資未來的成長機會、提高效率和增強客戶體驗是我們長期成功的關鍵。

And with that, I'll pass it back to Crystal for closing remarks.

在此之後，我會將其傳回給 Crystal 進行結束語。

Thank you, Tiffany. On a final note, I'd like to reaffirm our confidence in our long-term growth as we strengthen our business model amidst these near-term headwinds. For the past two decades, we prioritize timeless quality versus being excessively trend-driven, and we believe our ability to test, learn, and optimize positions us well for enduring growth.

謝謝你，蒂芙尼。最後，我想重申我們對長期成長的信心，因為我們在這些近期不利因素中加強了我們的業務模式。在過去的二十年裡，我們優先考慮永恆的質量，而不是過度的趨勢驅動，我們相信我們的測試、學習和優化能力使我們能夠實現持久增長。

This wouldn't be possible without the incredible work of our LuCrew, our brand fans and our stakeholders who support us in our mission to deliver attainable luxury to our customers and be the online destination for all of life's fashionable moment. With that, I'll turn it over to questions now.

如果沒有我們的LuCrew、我們的品牌粉絲和我們的利益相關者的出色工作，這是不可能實現的，他們支持我們實現為客戶提供觸手可及的奢侈品並成為生活中所有時尚時刻的在線目的地的使命。現在我將把它轉為問題。

(Operator Instructions) Brooke Roach, Goldman Sachs.

（操作員指令）布魯克·羅奇，高盛。

Good afternoon, and thank you for taking our question. Crystal, I was hoping you could discuss what you're seeing in the competitive environment more broadly and how that has impacted your view of sales trends in the quarter versus your expectations, relative to other exogenous factors that we saw in the quarter, like a weather transition or macro headwinds on the consumer?

下午好，感謝您提出我們的問題。水晶，我希望您能更廣泛地討論您在競爭環境中看到的情況，以及相對於我們在本季度看到的其他外生因素，這如何影響您對本季度銷售趨勢與預期的看法，例如天氣轉變或消費者面臨宏觀阻力？

Further, can you elaborate on what actions you plan to take to differentiate your brand and product from some of these fast growing online, fast fashion retailers?

此外，您能否詳細說明您計劃採取哪些行動來使您的品牌和產品與一些快速增長的線上快時尚零售商區分開來？

Hey Brooke. Thanks for the question. So I think I'd like to just address this in a very, very direct way, where we don't believe that Shian or Timo or any of the other fast fashion giants that are out there caused our negative comp in the quarter. They probably nibbled on the edges of our customer base, but it's not what drove the negative comp for us in the quarter.

嘿布魯克。謝謝你的提問。因此，我想我想以一種非常非常直接的方式解決這個問題，我們不相信 Shian 或 Timo 或任何其他快時尚巨頭導致了我們本季的負面業績。他們可能會蠶食我們客戶群的邊緣，但這並不是導致我們本季業績不佳的原因。

And outside of obvious macro headwinds, being underinvested in newness, and overreliance on our older reorder products that have been driving so much of our business for us over the last two years is really the biggest driver of our negative comps. And in our opinion, that's really easy to fix. It just might take a couple of quarters to fix it.

除了明顯的宏觀逆風之外，對新穎性的投資不足，以及過度依賴舊的再訂購產品，這些產品在過去兩年中為我們帶來了很大的業務增長，這確實是我們負面業績的最大驅動因素。我們認為，這很容易解決。可能需要幾個季度才能修復它。

We do, however, recognize the shift in the competitive environment as aggressive fast fashion retailers are gaining more traction with US consumers, especially over the last few years as well as more dynamic shifts in general within our customer base and for spending. In Q3 compared to Q2 for example, our customers shifted to a larger percent of spend from full-price products towards promotionally priced products. That's probably more macro within our customer set.

然而，我們確實認識到競爭環境的變化，因為積極進取的快時尚零售商越來越受到美國消費者的青睞，尤其是在過去幾年，我們的客戶群和支出總體上也發生了更加動態的變化。例如，與第二季相比，第三季我們的客戶將更大比例的支出從全價產品轉向促銷價產品。在我們的客戶群中，這可能更加宏觀。

And while we possess the agility to adapt to consumer demand changes, we're not looking to compete in the faster disposable fashion race at all. We believe in the resilience of our business model and we're dedicated to upholding the quality and integrity that we've built over the last two decades. Our strategy has been and continues to be very focused on customers who are seeking quality over quantity and enduring sales that last beyond the moment in time.

儘管我們擁有適應消費者需求變化的敏捷性，但我們根本不打算參與更快的一次性時尚競賽。我們相信我們的業務模式具有彈性，並且致力於維護我們在過去二十年中建立的品質和誠信。我們的策略一直並將繼續非常關注那些追求品質而非數量和持久銷售的客戶。

Our existing customers recognize the value not only in our quality product offering, but also in our brand and in our community. So we see this as a competitive advantage over fast fashion retailers who are less loyalty driven and have more of a transactional relationship with their customers.

我們現有的客戶不僅認識到我們優質產品的價值，而且認識到我們品牌和社區的價值。因此，我們認為這是相對於快時尚零售商的競爭優勢，快時尚零售商的忠誠度驅動程度較低，與顧客之間的交易關係較多。

To that end, we're focused on continuing to cost effectively build awareness for our attainable luxury product offering and further set ourselves apart from excessively trend chasing brands. Given the increased demand for our new and now fresh styles, we're leaning into those designs in a very measured and thoughtful way, and we believe that's going to continue to be a differentiator for us.

為此，我們致力於繼續以成本有效的方式提高人們對我們可實現的奢侈品產品的認知度，並進一步將自己與過度追逐潮流的品牌區分開來。鑑於對我們新的和現在新鮮的款式的需求不斷增加，我們正在以非常謹慎和深思熟慮的方式傾向於這些設計，我們相信這將繼續成為我們的差異化因素。

Thanks, Crystal. And secondly, for Tiffany, there's a lot of discussion about the engagement that customers have with promotions recently. And indeed you leaned into markdowns as a driver this quarter. Can you talk about your expectations for promotions and investing in markdown dollars for the next couple of quarters as you look to reposition some of the merchandising assortment in the next year? Thank you.

謝謝，水晶。其次，對蒂芙尼來說，最近有很多關於顧客參與促銷活動的討論。事實上，本季你作為司機傾向於降價促銷。當您希望在明年重新定位一些商品種類時，您能談談您對未來幾季的促銷活動和降價資金投資的期望嗎？謝謝。

Thanks for the question, Brooke. So as we oftentimes say, we do look at markdowns and discounts as one of our levers alongside of performance marketing spend where we're able to shift back and forth as needed based on what the customer is telling us.

謝謝你的提問，布魯克。因此，正如我們經常說的那樣，我們確實將降價和折扣視為我們的槓桿之一，以及績效行銷支出，我們可以根據客戶告訴我們的內容根據需要來回調整。

So for the third quarter, as you all heard, that was an important moment for our customer to be seeking out value. We also leverage the opportunity to take what was a heavier spring summer inventory coming into Q3 and move through that, so that we ended the season with cleaner 40% less, in fact, spring-summer balance compared to the prior year.

因此，正如大家所聽到的，第三季是我們的客戶尋求價值的重要時刻。我們也利用這個機會，利用進入第三季的春夏庫存量增加的機會，並進行調整，這樣我們在本季結束時的庫存量就比前一年減少了40%，事實上，春夏庫存比前一年減少了40%。

So as always, I think we don't want to give out specifics on markdown rates going forward or performance marketing spend anticipation going forward. We'll continue to leverage our internal models to ensure that we're working through all of those avenues and those levers and the most on contribution margin positive way.

因此，與往常一樣，我認為我們不想透露未來降價率或績效行銷支出預期的具體資訊。我們將繼續利用我們的內部模型，以確保我們正在透過所有這些途徑和槓桿以及最積極的方式實現邊際貢獻。

I think historically, if you look back on prior years, you'll see Q4 is typically a time, particularly in December, where we'll pull back on performance marketing relative to competitors, just given we aren't a gifting destination in Q4, we may follow suit with that this year. But again, I'm not going to give any real specifics around that because I think we are going to continue to follow where the customer is leading us in terms of promotion, markdowns, and how we want to leverage those.

我認為從歷史上看，如果你回顧前幾年，你會發現第四季度通常是一個時期，特別是在12 月，相對於競爭對手，我們會縮減效果營銷，只是考慮到我們在第四季度不是送禮目的地，今年我們可能會跟進。但同樣，我不會提供任何具體細節，因為我認為我們將繼續專注於客戶在促銷、降價以及我們希望如何利用這些方面的引導。

Thank you. So much. I'll pass it on.

謝謝。非常。我會把它傳遞下去。

Thanks, Brooke.

謝謝，布魯克。

Thank you.

謝謝。

Mark Altschwager, Baird.

馬克·阿爾茨瓦格，貝爾德。

Hi, this is Amy on for Mark. Thank you for taking our question. To start, can you please speak a bit more to the month-to-month top line cadence for the quarter and give us any color on differences in shopping behavior by income group?

嗨，我是馬克的艾米。感謝您提出我們的問題。首先，您能否詳細介紹本季逐月的收入節奏，並告訴我們按收入群體劃分的購物行為差異的具體情況？

Sure. Hi, Amy. This is Tiffany. I'll start with just the quarterly cadence that we typically provide. The quarter itself ended on a stronger note from a year-over-year comp basis. We were weakest in the early part of the core early to mid-part of the quarter end started to see improving comps towards through September.

當然。嗨，艾米。這是蒂芙尼。我將從我們通常提供的季度節奏開始。與去年同期相比，本季結束時表現更為強勁。我們在核心業務的早期階段表現最弱，在季度末的早期到中期，我們開始看到整個 9 月的業績有所改善。

Also, I can just give a little highlight of our view of the first five weeks into Q4. We've continued to see some gradual continued improvement in our overall transacted comps year over year starting to improve there on that on a pre return basis, just because we haven't fully rolled up all of our return estimates yet through the first five weeks, but we have continued to see some good top-line growth year over year improvement on the comp. And I'll hand it to Mark to talk a little about the household income in cohort question.

另外，我可以簡單介紹一下我們對第四季前五週的看法。我們繼續看到我們的整體交易比較逐年逐步持續改善，在回報前的基礎上開始改善，只是因為我們在前五週還沒有完全匯總所有回報估計，但我們繼續看到比較的收入同比增長有一些良好的改善。我將把它交給馬克，讓他談談隊列問題中的家庭收入。

Yeah. When reviewing the various customer household income segments and their purchasing behavior across multiple price tiers in our assortment, we actually did not see clear trading up or down between the segments. And the revenue contributions in each price tier across those household incomes remained stable compared to Q3 of 2022. So from that perspective, there were no specific shifts there.

是的。在審查不同客戶家庭收入細分市場及其在我們的產品組合中多個價格層的購買行為時，我們實際上沒有看到細分市場之間存在明顯的向上或向下交易。與 2022 年第三季相比，這些家庭收入的每個價格層的收入貢獻保持穩定。因此從這個角度來看，那裡沒有具體的變化。

As I mentioned, our new customer acquisition compared to existing customers there, what we saw is that the new customers as a percent of our total active customers was slightly lower compared to Q3 '22. But over time, that is obviously expected when you see when we are successful in retaining customers. But from an absolute perspective, we did see that new customers compared to Q3, 2022, were lagging compared to our existing customers. And shifting a portion of our performance marketing expense into markdowns and discounts has certainly played a role into that.

正如我所提到的，與現有客戶相比，我們的新客戶獲取情況我們看到，與 22 年第三季相比，新客戶占我們活躍客戶總數的百分比略低。但隨著時間的推移，當你看到我們成功留住客戶時，這顯然是預期的。但從絕對角度來看，我們確實看到，與 2022 年第三季相比，新客戶數量落後於我們現有客戶。將我們的部分績效行銷費用用於降價和折扣無疑在其中發揮了作用。

I hope that answers your question.

我希望這能回答你的問題。

Yeah, thank you for the detail. Very helpful. I'll pass it on.

是的，謝謝你的詳細資料。很有幫助。我會把它傳遞下去。

(Operator Instructions) Janine Stichter, BTIG.

（操作員說明）Janine Stichter，BTIG。

Hey, Janine.

嘿，珍妮。

Hey, You got Ethan Saghi on for Jeanine. Thanks for taking our questions. First off, just on increasing newness and novelty to pre-pandemic levels, just curious how quickly we should expect that to take?

嘿，你讓伊森·薩吉代替珍妮。感謝您回答我們的問題。首先，只是將新穎性和新穎性增加到大流行前的水平，只是好奇我們應該期望這種情況需要多快的速度？

I would expect it to evolve over the next several quarters, but we want to remain true to our test, learn and react model and we don't want to overseeing in any direction. So I would say that could take a couple of quarters, if not two to three.

我預計它將在接下來的幾個季度中不斷發展，但我們希望忠於我們的測試、學習和反應模型，並且我們不想在任何方向進行監督。所以我想說這可能需要幾個季度，甚至兩到三個季度。

Got it. Okay. And then next question -- just going back to returns. I know you guys talked about the new return policies in place. Sounds like it's good to hear the sequential improvement. I'm just curious how your customers are responding to those, if you could give any color there. Thanks.

知道了。好的。然後下一個問題——回到回報。我知道你們談論了新的退貨政策。聽起來很高興聽到連續的改進。我只是好奇你的客戶對此有何反應，如果你可以在那裡給出任何顏色。謝謝。

Sure, thanks for the question, Ethan. The returns continues to be a key area of focus for us. And frankly, it's an area that we have accepted as a very integral part of the business model in e-com. Without physical stores, it's really important to give our customer, the customer, the confidence that she needs to bring her purchases home to her at home fitting rooms. So we want to continue to maintain flexibility and all of our -- subtle, I would say, return policy changes that we've made this year have maintained a free 10-day return period that our customer does leverage certainly.

當然，謝謝你的提問，伊森。回報仍然是我們關注的關鍵領域。坦白說，我們已經將這一領域視為電子商務商業模式中不可或缺的一部分。如果沒有實體店，讓我們的顧客有信心將購買的商品帶回家到家裡的試衣間，這一點非常重要。因此，我們希望繼續保持靈活性，而且我們今年所做的所有退貨政策（我想說的是，微妙的變化）都保持了 10 天免費退貨期，我們的客戶當然可以利用這一期限。

We've continued to improve some of the back of the house metrics or data insights around returns, adding some technology enablement as well for us to be able to learn more about our customers' return behavior, also tackle some of the issues with customers who have a more excessive return rate, try to work with them to improve their shopping behavior and return behavior.

我們繼續改進一些有關退貨的後台指標或數據洞察，增加了一些技術支持，以便我們能夠更多地了解客戶的退貨行為，並解決客戶遇到的一些問題有較高的退貨率，嘗試與他們合作改善他們的購物行為和退貨行為。

Overall, the policy changes that we've read, there's actually been quite a few where we see customers who are citing how they love our flexible policy that we maintain, room for them to be able to initiate a free return where a lot of other companies are starting to take those things away. So I think that's an important element of the policy that we've maintained. We haven't experienced a significant amount of friction or complaints on the customer's part with regards to some of the changes that we've made around changes to the shipping return, shipping cost fee structure either.

總體而言，我們讀到的政策變化實際上有相當多的客戶表示他們非常喜歡我們維持的靈活政策，他們有空間可以發起免費退貨，而許多其他公司開始把這些東西拿走。所以我認為這是我們所維持的政策的一個重要組成部分。對於我們對退貨、運費費用結構所做的一些更改，我們也沒有經歷過客戶的大量摩擦或投訴。

Got it. Appreciate the color. I'll pass it on.

知道了。欣賞顏色。我會把它傳遞下去。

Dana Telsey, Telsey Advisory Group.

達納‧特爾西，特爾西諮詢小組。

Hi. Good afternoon, everyone. As you're thinking about the metrics, whether it's active customers' orders, AOV, and AOV increased that a tiny bit compared to last year. How are you seeing the promotional environment and how you planning going forward? And then when you look at category performance, any updates on categories as compared to last quarter what you're seeing from the consumer? Thank you.

你好。大家下午好。當您考慮指標時，無論是活躍客戶訂單、AOV 或 AOV 與去年相比都略有增加。您如何看待促銷環境以及未來的計畫？然後，當您查看類別表現時，與上季度相比，您從消費者那裡看到的類別有任何更新嗎？謝謝。

Sure. Dana, this is Tiffany. As it relates to AOV, you're correct, there was a slight uptick actually in our AOV year-over-year, which Mark broke down pretty well, I think, in his section during the call where we did see a bit of an increase in AUR offset a bit by UPTs to hold pretty steady or increase year over year.

當然。達納，這是蒂芬妮。由於它與 AOV 相關，你是對的，我們的 AOV 實際上同比略有上升，我認為 Mark 在電話會議期間的部分中很好地分解了這一點，我們確實看到了一些AUR 的增長被UPT 抵消了一點，保持相當穩定或同比增長。

I think one thing to note is the AOV does move for us in somewhat of a seasonal fashion. So when certain product classes are more predominant that carry higher AURs, then we may see that impact on AOV as well as during promotional time frames. But we typically see in Q4, we would typically see AOVs come down. So I'm not going to give any real specifics around that, but that's a fairly seasonal metric for us, and we continue to plan for it to react accordingly to what we've seen AOV movements look like in the past.

我認為需要注意的一件事是 AOV 確實以某種季節性的方式為我們變化。因此，當某些產品類別更占主導地位並具有較高的 AUR 時，我們可能會看到對 AOV 以及促銷時間範圍內的影響。但我們通常會在第四季看到 AOV 下降。因此，我不會提供任何具體細節，但這對我們來說是一個相當季節性的指標，我們將繼續計劃讓它根據我們過去看到的 AOV 走勢做出相應的反應。

Got it. And on the category side, anything to mention?

知道了。在品類方面，有什麼值得一提的嗎？

In terms of category specifics, I would say we're very happy with the momentum that we're seeing building again across our wedding and wedding related event categories. And specifically across all of our dress categories, that's been very encouraging to see some normalization there versus what we experienced from the previous quarter. And generally speaking, the newness and novelty that we've been introducing has been checking really well across the majority of our product classes.

就具體類別而言，我想說，我們對婚禮和婚禮相關活動類別再次建立的勢頭感到非常高興。特別是在我們所有的服裝類別中，與上一季的經驗相比，看到一些正常化是非常令人鼓舞的。總的來說，我們所推出的新穎性和新穎性在我們的大多數產品類別中都得到了很好的檢驗。

Got it. An initial framework as you think about the upcoming year, any pushes and pulls on margins that we should be thinking about, as you're thinking about qualitatively, 2024?

知道了。當您考慮即將到來的一年時，我們應該考慮一個初始框架，當您定性地考慮 2024 年時，我們應該考慮對利潤率的任何推動和拉動？

So we haven't shared any expectation yet around 2024. In fact, we're pretty heavily focused on internally building out our plans and framing the plans for next year. So we haven't changed anything. I think what stays true for us next year is we're continuing to lay the groundwork, make the necessary investments and adjustments that we've already started on this year to position us well going into next year.

所以我們還沒有對 2024 年左右分享任何預期。事實上，我們非常專注於內部製定我們的計劃並製定明年的計劃。所以我們沒有改變任何東西。我認為明年對我們來說仍然正確的是，我們將繼續奠定基礎，進行今年已經開始的必要投資和調整，以便為明年做好準備。

We've spoken about some investments that we've made with our product costing team, getting those folks hired in this year, that we've spoken to in the past as being an opportunity for us to improve upon our product costing. But that's going to be a multi-quarter, potentially multi-year effort for us. I don't know if Mark, you have anything to elaborate there. But I think that's an important lever that I think could have some effect for next year.

我們已經談到了我們與產品成本團隊進行的一些投資，今年僱用了這些人，我們過去曾說過，這是我們改進產品成本的機會。但這對我們來說將是一個持續多個季度、可能持續多年的努力。我不知道馬克，你有什麼要詳細說明的嗎？但我認為這是一個重要的槓桿，我認為可能會對明年產生一些影響。

Yeah. So we were able to hire the team and we're very excited with the talent that we have. We're right now focused on -- let's call it, a low hanging fruit. And at the same time, we started working on some medium-term improvements that are going to layer on top of that. And obviously, we need to balance our needs of our buying model with the possibility of reducing those costs. I would say, from an effect that we'll have we've already seen some positive impacts there. So we're encouraged by that.

是的。因此，我們能夠聘請這個團隊，我們對我們擁有的人才感到非常興奮。我們現在專注於──我們可以稱之為，一個容易實現的目標。同時，我們開始致力於一些中期改進，這些改進將在此基礎上進行。顯然，我們需要平衡購買模式的需求與降低這些成本的可能性。我想說，從我們將獲得的效果來看，我們已經看到了一些正面的影響。所以我們對此感到鼓舞。

And we'll see how that's -- based upon what the extra margin potential that there is, what we -- how we apply that. In some cases, we will apply that to be more price competitive, for example. So that would not immediately leads to a higher margin per se, but more margin dollars and in other cases, globally apply to expense the margin will make those decisions and trade-offs based upon what Lulu's brand needs at that moment in time.

我們將看看這是如何的——基於額外的利潤潛力，我們——我們如何應用它。例如，在某些情況下，我們將應用它來提高價格競爭力。因此，這本身不會立即帶來更高的利潤，但會帶來更多的利潤，在其他情況下，全球範圍內適用於費用的利潤將根據露露品牌當時的需求做出這些決定和權衡。

Thank you.

謝謝。

At this time, there are no further questions, and that concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

目前沒有其他問題了，今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。