All right, good morning, everyone. Thank you for being here at Raymond James Institutional Investors Conference. I'm Rick Patel, research analyst covering soft lines retail, global brands, and digital commerce here at Ray J. It's my pleasure to introduce Revolve. Revolve is a digitally native company that sells fashion online globally through their namesake Revolve banner as well as the luxury banner FWRD. We're thrilled to be joined by Chief Financial Officer Jesse Timmermans as well as VP of Investor Relations Erik Randerson. Thank you guys for being here, and I'll turn it over to Jesse.
All right, well, thanks, Rick, and good morning, everybody. Good to be here. It's kind of a dim room, so I'll try to keep it interesting and not put people to sleep with two dozen slides. But maybe we'll start with who Revolve is if you're not familiar. We are a leading fashion destination for the next generation consumer. Really, we highlight four different pillars here. Number one is data-driven merchandising and tech. We were founded 20 years ago by Mike and Michael, who are still our Co-CEOs. They were not fashion guys. One of them still is not a fashion guy. They had to rely on data to make their decisions from day one. Even to today, the platform is built on internally developed technology, inventory management systems, internally developed technology.
So we'll talk about AI a little bit later, but AI is not new to us. We've been working with AI for a number of years, whether it's machine learning, the more modern, last 18 months of AI, which has been moving very rapidly. But really, from day one, it's been data-driven merchandising and internally developed technology. We have a global reach and consumer appeal. We are squarely focused on the next generation consumer, primarily women at this point. We do have a smaller men's business that is growing very nicely, which is another growth vector that we'll talk about. And then combining that data-driven merchandising, 100,000 styles, 1,000 different brands, with a very powerful marketing engine.
We are the leaders in the early days of influencer marketing, social media marketing, and even to today with the newer platforms of TikTok and some of the international platforms, very keen on that and just engaging with that next generation consumer wherever she's at, whatever platform she is on. And on the bottom right here, profitable and capital-efficient business model, very important and has given us the flexibility to invest in the business consistently over the past 20 years, and especially important in an environment like we're in today. We operate two separate but complementary platforms, Revolve and FWRD. So on the left, you have Revolve, 85% of the business focused on, again, that millennial Gen Z consumer $274 average order value. It's really about emerging and owned brands. These emerging brands, maybe you've heard of the brand, but you can't find the style somewhere else.
So it's a constant flow of newness on Revolve. A third of the business is dresses. And then you complement that with FWRD, 15% of the business. This is the higher-end luxury destination, complements Revolve, and then it skews more towards handbags and shoes so she can really, really fill out that wardrobe. A little bit older, you think millennial and Gen Z versus millennial and Gen X, but a very good crossover, which is one of our growth initiatives as we look ahead. And we'll talk a little bit about our pop-up that we've done in Aspen, which combines both Revolve and FWRD in one destination to further enhance that crossover shopping. Customer has been number one since day one. We were really the pioneers of free shipping and free returns back in 2003, and we've held to that over time.
With record CSAT in 2023, our customer satisfaction scores always best in class, and then continue to set the bar and raise the bar for ourselves and just best in class in the industry. And then finally, that's been rewarded. We've been rewarded from this customer service and customer satisfaction score through a very loyal customer. We'll get into some of the customer dynamics here in a minute. But really, she sees us as the source for fashion and inspiration. She's a full price buyer. She's not typically a markdown customer. We did have excess inventory like everybody else as we entered the year, so our markdown sales were higher than they typically are, but still this year closing at a 79% full price mix, which again, stacks up very well across the board in the industry. Our spend grows with her tenure.
Over half of our customers are existing customers, and they contribute to 80% of the net sales. So as she comes back, she orders more frequently and at higher average order values over time. We operate in a huge market. In the U.S., a $673 billion market, about a third, just over a third, is digital, and that digital piece is growing. If you think about the global market, less than 20% of our sales right now are international or shipped to customers internationally, and 25%, 26% of that international customer is digital, again, growing digitally. Then last, we have not just the digital shift, but a shift in purchasing power to this next generation consumer. So the combination of being digital first and focused on this next generation consumer puts us in a really great in the crosshairs of growth for the coming years.
Now, the last 4 years have been anything but normal. If you kind of think back in time, 2003 since founding through 2019, growing very consistently over time, not just growing, but also consistently profitable outside of 1 year in the GFC. Then you hit 2020. Again, our customer and our brand is all about going out, living your best life. A third of the mix is dresses. When COVID hit, that completely went away. So you can see here just one indicator here, dresses declined 26% in 2020. Then you had the massive rebound in 2021 and 2022, where you saw dresses increase 70% and 50% in 2021 and 2022. And now in 2023, we have this normalization of spend coming off of those reopening events of 2021 and 2022.
And not only that, you have the kind of the pullback from those reopening events and her getting out again. But then you have, on top of that, the challenging macro situation we're in, inflation, premium price point, younger consumer. So, a challenging 2023 relative to some of the historical periods. But over the long term, very strong track record of, again, not only growth, but profitability. You can see the growth over $1 billion today, consistent net income, and adjusted EBITDA, which again, very differentiated across the peer group. If you compare us to the relevant benchmarks, you have premium department stores. If you use 2016 as the base year, those premium department stores are smaller today than they were back in 2016. E-commerce market growing at 14% and Revolve at a 19% CAGR from 2016 to 2023. So again, continue to take share.
We're still a lot of share out there to be taken. If we go to that, again, back to profitability, that's really enhanced the balance sheet over time and puts us in a really, really strong financial position, consistent free cash flow and operating cash flow at $245 million of cash at the end of 2023. That's with deploying around $30 million of stock buybacks in 2023. You compare that just to a few years ago in 2019 when we went public with $65 million of cash. On the bottom, not to be missed here, very capital-efficient with less than 1% of our net sales in CapEx. Again, this goes back to the data-driven merchandising, the internally developed software. The platform has been built and developed over the last 20 years, so it's just incremental improvements over time.
Again, back to comparing us, really differentiated with the peer group in that being GAAP profitable and free cash flow positive for the last 12 months compared to nearly everyone else. Very important, especially in this luxury sector, to have that strong balance sheet, to have the consistent growth and profitability over time. Just two examples here of competitors, peers that really stood out this year, Farfetch being acquired, quote-unquote, acquired by Coupang. Then Matchesfashion, who was once valued at $1 billion, selling for $66 million this past year. Again, a very challenging environment out there, really starting to weed out the weaker players. This is something we experienced back in the Great Financial Crisis as well.
Mike and Michael were still at that point bootstrapped, running a growing and profitable business, which served them well as the crisis kind of weeded out the competitors; the strong emerged even stronger. The underlying metrics behind that growth and strong balance sheet, number one is active customers, 2.5 million active customers. That's a 17% CAGR, nearly doubled, more than doubled in the last five years, and continues to grow. So this is important when we think about the broader TAM. We think we're less than 3% penetrated in that broader TAM in this kind of core customer. Net sales at full price, I mentioned, 79%, lower than the last couple of years, but that again was in the rebound years coming out of COVID, where we were chasing inventory, chasing that demand. So we had record full price.
Important to note that in 2023, even at 79% for the full year, comparable to 2019, we actually exited the year much higher than that. Again, we entered the year like many others with too much inventory that we had to correct. So markdown sales were higher in the first part of the year than they were as we exited 2023. And then a premium average order value, again, this year has been skewed kind of the tail of two halves, with the first half being a lower average order value due to that markdown mix and the second half exiting with a higher full price mix and higher average order value. Again, if you go back to the two segments, there is an interplay there as well, with FWRD having an average order value of more than 2x that of Revolve.
So when we do see shifts between Revolve and FWRD, that will move the average order value. And our customers are productive. I mentioned this a little bit earlier, average number of total orders per active customer, 3.42. Again, this is coming off of the peaks that we experienced the last couple of years, but still higher than 2019. Net sales per active customer, also higher than 2019. And then our retention of those prior cohorts of 92% average over the last three years, so 2020 through 2023. Again, we averaged these years out because of that volatility I mentioned earlier, with COVID being depressed, massive recovery in 2021, 2022, normalization in 2023, but the average of those four years of 92% versus 2019 of 89%. So again, just shows the loyalty of that customer and the importance of that existing customer.
Here you can see that existing customer, 52% of our customers are existing. They generated 79% of the orders. So you can see the order number dynamic play out there, and then generating 80% of the net sales. So again, that customer places more orders, and each one of those orders at a higher average order value, representing 80% of our net sales. And back to the financial strength, allowing us to invest back into the business when others, especially this year, are forced to play defense and pull back, even on things like marketing, investing in people, investing in talent, investing in AI. The strong balance sheet allows us to keep the pedal down. And just a few examples here from our pop-up that we was that December 15th that we opened the pop-up in Aspen.
That's been a really great crossover and new customer acquisition tool for both Revolve and FWRD, expanding our fulfillment network in the East Coast and even in the U.K., so kind of shortening the distance between us and the customer, and then optimizing on the reverse logistics and reducing the cost on returns. Helsa, one of our own brands that we launched, again, back to the crossover of Revolve and FWRD. This has been a really great brand for us, and then it sells both on Revolve and FWRD, premium price point, slightly different aesthetic than some of our historical owned brands. AI is real for us. We are investing in AI. We've been investing in AI, whether it was, again, the AI of today or machine learning of five, 10 years ago. This is very impactful. We think it can make a difference across the organization.
Some of the earlier kind of nearer-term objectives in AI is all about website, personalization, product selection, sizing, fit. We also see a lot of opportunity in editorial and catalog and imagery, and then in owned brands, actually designing the clothes in AI. If we look at our capital allocation, we talk about some of the growth areas that we're investing in, strong balance sheet with $245 million of cash. Number one is invest back into the business. Mike and Michael still own nearly 50% of the business, so they are truly investors. They operate like owners and investors. So number one is invest back in the business. That's where we can get the greatest return. Number two is thoughtfully invest and pursue M&A. We haven't pulled the trigger on anything. We're very disciplined, but we do look at a lot, and in times like this, opportunities emerge.
So we continue to be active there. And then finally, return of capital. So we authorized a $100 million stock buyback last year, deployed over $30 million of that with 2.2 million shares repurchased at an average price of $13.91. So looking ahead, growth drivers. I mentioned this before, but we believe we are still very, very under-penetrated in the market with our 2.5 million customers. You compare that to any one of these competitors across the board or the number of women, 18-44, in the U.S., we believe we're around 3% penetrated. So massive opportunity domestically. Then we also have opportunity to expand into adjacent categories. I mentioned men's. We haven't talked about beauty yet. Beauty is a great opportunity. Again, these are opportunities not just for that existing customer, but also to acquire new customers, get her in the door.
Beauty is a lower average order value. It's a great new customer acquisition tool. We found that she comes back then and buys at higher average order values over time. Then within apparel, different we call them end uses. So whether it's active or kind of workwear, right now we're known for dresses going out. We're top of mind when she's going to festival, going to the brunch, going to the wedding party. We need her. We need to be top of mind for her when she's thinking about her workwear, her active, or any other aspect of her life. Continuing on with that kind of expanding the wallet share, I mentioned several times the crossover between Revolve and FWRD. Again, Revolve, that millennial girl dresses right now, mid-single digit percent overlap between Revolve and FWRD. FWRD has more skews more towards handbags and shoes.
So again, complementing her wardrobe with those handbags and shoes. We know that if she's buying a $200 pair of jeans, she's buying a multi-thousand-dollar handbag. She's buying that really nice pair of statement shoes. Why not FWRD? Here, just recently starting to invest in marketing at FWRD a couple of years ago, named Kendall Jenner as our creative director. I mentioned the Aspen store, doing more brand collaborations. We think there's a huge opportunity in high-value customers and really going after that high-value customer. Shared inventory is important. This is also a new initiative over the last couple of years where we can share and cross-list that inventory between Revolve and FWRD and optimize the traffic.
Resale, our FWRD Renew program, so offering either pre-owned handbags that she purchased initially on FWRD and can resell to us to get a credit for a new handbag, or iconic brands that we don't typically carry new, offering those for sale. Aspen is another great example where we've sold everything from a $20 beauty item to a $100,000 handbag. Again, showing that opportunity between the Revolve and FWRD crossover and just the broad spectrum of her purchases. Aspen, I think I mentioned that enough, but again, really great opportunity to engage the customer in a different way. The customers, most of the customers at Aspen are new customers. So again, a way to attract.
And this is another example and maybe proof point of our under-penetration in that we're acquiring new customers with this destination, and actually has gone so well that we are extending the time that we're in Aspen at this pop-up. So really excited about that. Another great aspect of the physical location in Aspen, our return rate is significantly lower, single digits versus our, call it, 60% return rate online. So we see more opportunity there over time. International, I mentioned the domestic market, 3% penetrated. We think there's a huge opportunity internationally as well. Less than 20% of our sales are international. Some of the bright spots of recent, Mexico, it's now become one of our third largest international markets, growing nearly triple digits. New customers, again, we started to invest a little bit more in marketing.
Men's has been growing really well in Mexico, so a lot going right in Mexico right now. They have the benefit of currency hasn't been as pressured. Their economy is better relative to some of the other international regions, but really great opportunity in Mexico. And then some of the other international growth initiatives, we continue to optimize and localize the customer experience as we've done over the last few years. So from the free shipping, free returns, Canada, being able to refund the customer their duties and taxes so they don't have to do that. Marketplace partnerships in Asia, payment choices is really important for that international customer and different from the U.S., and then just continue to enhance the technology, the assortment, the merchandise, and the experience for that customer internationally.
Owned brands, owned brands is 20% of our business now, premium margin to that of our third-party brands. We think there's huge opportunity here, not only to acquire new customers, expand the merchandise assortment, optimize the assortment, but also to expand gross margin and profitability over time. Just some examples, Marianna Hewitt, we just named as our creative director for L'Academie, the Helsa brand by Elsa Hosk, I mentioned. So these are two interesting and different, not only owned brands, but collaborations with influencers/personalities. Then expanding into using owned brands to expand into some of those categories like active denim, kind of bringing back our Lovers and Friends denim line. Then finally, last slide, just some areas to get excited for.
And this doesn't go without saying that it is still very uncertain out there, a lot of challenges, but we think we're well positioned and a lot of opportunity as we look ahead. Number one is inventory. If I kind of think back to this time last year, we were coming into the year with too much inventory, had to correct, had to mark down. We successfully worked through that inventory enlarged. We still have some work to do on FWRD. And compare that to 2024, now entering the year in a healthy inventory position, which sets us up well for the middle box year, gross margin expansion. Again, starting well positioned on inventory, still some work to do on FWRD, but this is the first gross margin. And Q4 was the first quarter we've had margin expansion in 6 quarters. And then early progress on logistics costs.
This has been a massive pressure point over the last several quarters, year plus, really coming out of COVID and that rebound with fuel surcharges, freight. And on top of that, just the consumer behavior on returns. Our return rate ticked up 4-5 points since 2019. There's some other things going on there with international localization that are good reasons to increase the return rate. But even outside of that, year-over-year, return rates increased 1-2 points, which adds pressure to that selling and distribution/logistics cost line item. But again, early progress there. Q4, we started to see that and optimistic for what we can do to that line item in 2024 to drive the bottom line. And that's all. Do we have questions or save that? Okay, great. Thank you.