FIGSNYSE: FIGS

Figs reported disappointing 3Q24 results with a 2% revenue decline and a 13 percentage point drop in adjusted EBITDA margins, leading to a 30% stock price drop. The company's high SG&A expenses and lack of growth make it difficult to compete against lower-priced alternatives, justifying my Hold rating. Questionable $25 million investment in a pre-product healthcare education app raises concerns about capital allocation and potential conflicts of interest.

FIGS, Inc. (NYSE:FIGS ) Q3 2024 Earnings Conference Call November 7, 2024 5:00 PM ET Company Participants Tom Shaw - Senior Vice President, Investor Relations Trina Spear - Co-Founder & Chief Executive Officer Sarah Oughtred - Chief Financial Officer Conference Call Participants Dana Telsey - Telsey Group Josh Reiss - Raymond James Bob Drbul - Guggenheim Brooke Roach - Goldman Sachs Brian Nagel - Oppenheimer Lorraine Hutchinson - Bank of America Matt Koranda - ROTH Capital Nathan Feather - Morgan Stanley John Kernan - TD Cowen Ashley Owens - KeyBanc Capital Markets Operator Thank you for standing by, and good afternoon. Thank you for attending today's FIGS' Third Quarter Fiscal 2024 Earnings Conference Call.

I rate FIGS, Inc. stock as a buy, expecting growth to inflect upwards with orders per buyer potentially more than doubling. FIGS has enhanced top-of-funnel awareness, product innovation, and distribution capacity, driving customer acquisition beyond its core scrub customer base. Margin pressures are temporary; scaling non-scrub products and the high-margin TEAMS business should flip this headwind into a tailwind.

FIGS' Q2 2024 results showed moderate revenue growth but at the expense of lower margins due to increased spending on products and marketing. The company's lack of cost management and high gross margins make it vulnerable to competition, justifying my Hold rating. Despite some improvement in guidance, the valuation remains unattractive with the stock trading at a high P/E ratio even under optimistic scenarios.

FIGS, Inc. (NYSE:FIGS ) Q2 2024 Earnings Call August 8, 2024 5:00 PM ET Company Participants Todd Maron - Investor Relations Trina Spear - Co-Founder and Chief Executive Officer Kevin Fosty - Interim Chief Financial Officer Conference Call Participants Brooke Roach - Goldman Sachs Bob Drbul - Guggenheim Dana Telsey - Telsey Group Adrienne Yih - Barclays Rakesh Patel - Raymond James Chandana Madaka - KeyBanc Matt Koranda - Roth Capital Partners Nathan Feather - Morgan Stanley John Kernan - TD Cowen Brian Nagel - Oppenheimer Operator Good afternoon. Thank you for joining today's FIGS Second Quarter and Fiscal 2024 Earnings Conference Call.

Figs reported another round of sluggish growth. Margins fell due to a shift in product mix and increased marketing expenses.

While the top- and bottom-line numbers for Figs (FIGS) give a sense of how the business performed in the quarter ended June 2024, it could be worth looking at how some of its key metrics compare to Wall Street estimates and year-ago values.

FIGS is a well-known retailer that specializes in stylish and high-quality scrubs. The company is recognized for its creative designs and comfortable materials, but it has experienced a slowdown in growth and struggles to maintain decent profit margins. With increasing competition, achieving profitability in the future may prove to be even more challenging. This article examines the earnings report for the first quarter of 2024, which showed disappointing results despite increased investments in marketing and product development that did not lead to growth.

Figs surpassed management's guidance but fell short of Wall Street's expectations nevertheless. The company is in good financial shape, and the stock is cheap, but Figs needs to get back to growth.