FIGS Q1 Earnings Call: Growth Driven by U.S. Rebound and Brand Investments Amid Tariff Uncertainty

Healthcare apparel company Figs (NYSE: FIGS) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 4.7% year on year to $124.9 million. Its non-GAAP loss of $0 per share decreased from $0.01 in the same quarter last year.

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StockStory’s Take

Figs’ first quarter results reflected a return to positive growth in the U.S. and an uptick in average order value, as management emphasized normalization in healthcare apparel purchasing patterns. CEO Trina Spear noted, “We saw continued signs that scrubwear trends are starting to normalize from the COVID overhang,” highlighting stronger gains during standard pricing periods and improved customer retention. The company also attributed performance to successful customer reactivation campaigns and increased full-price sales, resulting in record average order values. International sales maintained momentum, and non-scrubwear items like footwear and underscrubs experienced double-digit growth. Management pointed to disciplined marketing and inventory strategies, along with ongoing investments in fulfillment and supply chain operations, as key contributors to the quarter’s outcomes.

Looking ahead, management’s outlook centers on mitigating the impact of newly imposed tariffs and adapting to ongoing macroeconomic uncertainty. CFO Sarah Oughtred stated, “Our full year adjusted EBITDA outlook assumes the current 10% baseline and reciprocal tariffs on China remain in effect,” while emphasizing the company’s focus on cost mitigation and selective investments in international expansion, business-to-business (B2B) sales, and retail stores. CEO Trina Spear indicated continued commitment to cautious promotional strategies and a deliberate approach to potential pricing actions, noting, “We’re focused on doing everything we can to offset the impact of the tariffs.” Management expects gross margins to remain stable in the near term, but anticipates higher cost pressures in the second half of the year as tariff effects flow through inventory. Figs plans to prioritize operational discipline while maintaining investments in growth initiatives.

Key Insights from Management’s Remarks

Management identified a rebound in U.S. demand, improved customer engagement, and ongoing supply chain investments as primary drivers of quarterly performance, while also outlining challenges from tariffs and evolving promotional strategies.

• U.S. customer reactivation: Management highlighted targeted efforts to bring back lapsed customers, supported by refreshed marketing campaigns and expanded product offerings, which contributed to the increase in active customers and a return to domestic sales growth.
• Product mix and limited editions: The quarter saw robust performance in limited edition scrubwear and new color launches, with management noting that higher average unit prices and a reduction in discounting drove average order value to a record high.
• International sales expansion: Figs continued to grow internationally, particularly in markets such as Mexico, Europe, and the Middle East, with plans to enter Japan and South Korea later in the year. Management cited localized marketing and community engagement as key factors in these regions.
• Supply chain and fulfillment center investments: The company is working to optimize its recently expanded fulfillment center, targeting greater cost efficiencies and scalability. Management believes these logistics improvements will support future growth and help offset tariff-related pressures.
• Tariff mitigation strategies: While acknowledging the potential cost impact of new tariffs, management outlined a multipronged response that includes renegotiating supplier contracts, adjusting inventory sourcing, and scrutinizing expense management. Pricing increases were described as a last resort, with the company preferring to maintain affordability for healthcare professionals.

Drivers of Future Performance

Figs’ guidance for the remainder of the year is shaped by ongoing tariff exposure, evolving promotional tactics, and continued investment in growth channels.

• Tariff and cost management: Management expects tariff-related cost increases to have a more significant impact in the second half of the year. The company is exploring supply chain efficiencies, vendor negotiations, and expense controls to minimize these effects, while remaining cautious about passing costs to customers through price increases.
• International and B2B expansion: The company plans to accelerate growth in international markets by launching in Japan and South Korea and investing in localization efforts. Expansion of the B2B “TEAMS” business is also a priority, with new leadership and outbound sales initiatives aimed at capturing institutional apparel contracts.
• Retail and community engagement: Figs is investing in physical retail, with new Community Hub store openings planned. Management expects these locations to attract new customers and strengthen brand loyalty, noting that a significant proportion of store visitors are new to the brand and that many transition to omnichannel purchasing.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will focus on (1) the pace and success of international expansion, including new market entries in Japan and South Korea, (2) the effectiveness of cost mitigation efforts as tariff pressures build in the second half of the year, and (3) progress in scaling the B2B TEAMS business and physical retail footprint. Additional attention will be paid to customer retention metrics and the impact of evolving promotional strategies.

Figs currently trades at a forward P/E ratio of 67.2×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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