Shares of Figs (FIGS 3.44%) 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.

A smiling group of healthcare workers.

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.

Today's Change
(3.44%) $0.15
Current Price
$4.67
Arrow-Thin-Down
FIGS

Key Data Points

Market Cap
$756M
Day's Range
$4.45 - $4.72
52wk Range
$4.18 - $7.05
Volume
2,343,023
Avg Vol
2,121,088
Gross Margin
66.41%
Dividend Yield
N/A

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.