“The most exciting thing is that even with the results we’ve seen, we still have so many opportunities right in front of us,” Co-Chief Executive Trina Spear told analysts during a Nov. 10 earnings call. “We’re still underpenetrated in the United States. Our nonscrubs lifestyle offerings continue to gain traction, and the international opportunity is largely untapped.”
The Santa Monica-based brand posted $103 million in net revenue in the third quarter, a 34% year-over-year increase. Scrubs brought in $89.5 million of the sales, a 37.4% year-over-year jump, while lifestyle items — lab coats, outerwear, activewear, loungewear, compression socks, footwear, masks and face shields — accounted for the remaining $13.2 million, a 12.9% increase.
Domestic sales added up to $95.8 million, and the remaining $6.9 million in revenue came from customers in Canada, Australia and the United Kingdom. The company also grew its total customer base to 1.7 million active buyers from 1.3 million. Active buyers are those who have made a purchase within the last 12 months.
Figs generated a net income of $7 million or 3 cents a share in the quarter, a 64.2% decrease compared to the third quarter of 2020. Both top- and bottom-line results met Wall Street expectations; however, the company’s stock lost about 15% of its value following the earnings report.
Chief Financial Officer Jeff Lawrence attributed the dip in earnings to “investments in our team to drive strategic initiatives, costs related to becoming a public company and increased charitable donations.”
The company’s margin was also impacted by a higher marketing spend and increased ocean freight rates, as well as increased labor rates that drove higher fulfillment costs.
“We are monitoring the rapidly evolving macro challenges surrounding inbound freight, especially with the upcoming holiday season,” Lawrence told analysts. “Given these challenges, we proactively made the decision to air freight more goods during Q4 based on the demand for our products, coupled with the reality of operating a global supply chain in a Covid-19 world. Based on our visibility today, what that means for the fourth quarter is we anticipate spending approximately $8 million to $10 million in air freight. For context, in the third quarter, we spent about $1 million on air freight. … We currently anticipate more favorable shipping dynamics as we enter into 2022.”
Spear said that from a supply chain perspective, Figs is in a really strong position because it’s a uniform company, “which means that our customers need our products in order to do their jobs, so demand is predictable. … That allows us to lock in costing and capacity and bring in goods further in advance.”
She added that more than 90% of Figs’ products are made with FIONx, and more than 80% of its volume comes from 13 core scrubwear styles, resulting “in a very consistent high-volume, low-SKU count production, which makes us essentially a supplier’s dream.”
Figs has 202 employees and outsources its garment manufacturing operations to factories in Southeast Asia, China and South America.
Spear co-founded Figs with Co-Chief Executive Heather Hasson in 2013. The digital native brand sells 98% of its products through its website and mobile app. Figs scrubs are made with proprietary fabric technology, called FIONx, that offers four-way stretch, anti-odor, and moisture-wicking properties.
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