Shares of Figs (FIGS 0.34%) were taking a dive today after the apparel company best known for scrubs for healthcare workers posted disappointing second-quarter results, including a decline in profits.
As of 2:42 p.m. ET, the stock was down 12.5% on the news.
Image source: Getty Images.
Figs' challenges continue
Figs, which calls itself the largest direct-to-consumer platform in healthcare apparel, said that revenue increased 4.4% to $144.2 million, which matched estimates.
Gross margin in the quarter slipped by 210 basis points to 67.4% due to product mix shift of limited-edition gear. Operating expenses rose 7% to $95 million due to higher selling and marketing expenses and a transition to a new fulfillment center.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell from $18.9 million to $12.9 million, and it reported earnings per share of $0.01, compared to $0.04 in the quarter a year ago and estimates of breakeven.
CEO Trina Spear expressed optimism, saying, "Our strong second quarter performance shows that our investments are paying off."
Figs also announced a $50 million share repurchase authorization.
Can Figs get back to growth?
Figs went public promising disruptive growth in the healthcare apparel space, but a few years later, that vision seems to be dead.
For 2024, Figs is now projected just flat to 2% revenue growth and modest adjusted EBITDA margins of 9.5% to 10%.
Flat growth at a company that's operating at breakeven on a generally accepted accounting principles (GAAP) basis is recipe for further stock price declines.
There's little reason to bet on a Figs comeback based on this report.
