Healthcare apparel company Figs (NYSE: FIGS) announced better-than-expected revenue in Q3 CY2025, with sales up 8.2% year on year to $151.7 million. Its non-GAAP profit of $0.05 per share was significantly above analysts’ consensus estimates.
Is now the time to buy FIGS? Find out in our full research report (it’s free for active Edge members).
Figs (FIGS) Q3 CY2025 Highlights:
- Revenue: $151.7 million vs analyst estimates of $142.5 million (8.2% year-on-year growth, 6.4% beat)
- Adjusted EPS: $0.05 vs analyst estimates of $0.02 (significant beat)
- Adjusted EBITDA: $18.85 million vs analyst estimates of $12.38 million (12.4% margin, 52.3% beat)
- Operating Margin: 6.4%, up from -6.2% in the same quarter last year
- Active Customers: 2.78 million, up 108,000 year on year
- Market Capitalization: $1.23 billion
StockStory’s Take
Healthcare apparel company Figs delivered a well-received third quarter, with management attributing the results to consistent execution across core products and disciplined promotional strategies. CEO Trina Spear pointed to broad-based growth in scrubwear and the U.S. market, as well as the company’s shift toward fewer promotions, which helped drive higher average order values and customer engagement. Additionally, Spear highlighted improvements in product fit and returns processing, citing a “great sign of our brand health and support for sustainable growth.”
Looking forward, Figs’ management expects momentum to continue, supported by increased inventory investments, new product introductions, and targeted international growth. The upcoming launch of the FIBERx fabric at the 2026 Winter Olympics and further expansion into markets like China and South Korea are expected to broaden the company’s reach. CFO Sarah Oughtred noted that ongoing tariff mitigation, efficiency improvements, and selective marketing investments are key to maintaining profitability, stating, “We are excited to continue to launch newness with the same discipline that has supported our strong productivity this year.”
Key Insights from Management’s Remarks
Management emphasized that disciplined promotional pullback, product innovation, and international expansion were central to the quarter’s strong performance and shaped the updated outlook.
- Promotional reset impact: The company’s deliberate reduction in promotional activity led to higher average order value and improved profitability, as more sales occurred at full price and fewer discounts were given.
- Core product focus: Growth was primarily driven by the core scrubwear category and best-selling colors, while new silhouettes and improved fits reduced return rates and enhanced customer satisfaction.
- International market progress: Figs expanded its reach from 33 to nearly 60 international markets, with recent launches in Japan and South Korea, and an upcoming debut in China via Tmall, aiming to address the large global healthcare professional population.
- Non-scrubwear growth: Underscrubs, compression socks, and footwear categories saw renewed momentum, supported by targeted product launches and better alignment with customer preferences.
- Operational efficiency gains: The company achieved margin improvements through supply chain optimization, inventory investments, and reduced marketing expenses, even as it began facing higher tariffs on imported goods.
Drivers of Future Performance
Management’s outlook centers on expanding core and new product offerings, scaling international markets, and mitigating ongoing tariff pressures while sustaining profitability.
- International and teams expansion: The company plans to accelerate international growth, particularly in Asia, and further develop its Teams program, which targets institutional sales to healthcare organizations and is expected to be increasingly accretive to the bottom line.
- Inventory and product innovation: Figs is investing in deeper inventory for key styles and introducing new fabrics like FIBERx, with the goal of supporting product availability and higher wallet share from healthcare professionals.
- Tariff mitigation and efficiency: Management continues to focus on offsetting tariff headwinds by optimizing supplier negotiations, improving logistics, and maintaining pricing discipline, though it acknowledges that tariffs will remain a significant challenge for margins in the coming year.
Catalysts in Upcoming Quarters
Key upcoming catalysts include: (1) the effectiveness of international market launches and early traction in China, (2) the contribution of new product lines like FIBERx and expanded compression socks to overall sales, (3) the impact of Community Hub openings on customer acquisition and omnichannel engagement, and (4) continued progress on tariff mitigation and inventory optimization as indicators for sustained profitability.
Figs currently trades at $8.72, up from $7.53 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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