In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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FIGS Inc (NYSE:FIGS) reported a 5% year-over-year increase in Q1 revenues, surpassing expectations.
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The company achieved a record average order value (AOV) of $119, indicating strong brand strength.
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FIGS Inc (NYSE:FIGS) saw positive growth in the US market, driven by reactivation of lapsed customers.
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International sales increased by 16%, with strong performance in markets like Mexico, Europe, and the Middle East.
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The company maintains a strong balance sheet with $251.2 million in net cash equivalents and short-term investments.
Negative Points
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Gross margin contracted by 130 basis points to 67.6%, partly due to higher freight expenses.
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The company faces uncertainties due to recent tariffs, which could impact cost of goods sold.
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Selling expenses increased to 26.2% of net revenues, reflecting higher costs from a new fulfillment center.
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There is a potential for higher inventory growth in Q2 due to trade environment uncertainties.
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FIGS Inc (NYSE:FIGS) anticipates a slowdown in trends in the second half of the year due to reduced promotional activities.
Q & A Highlights
Q: Can you elaborate on the tariff mitigation strategies and why not consider price increases to offset the impact? A: (Sarah Altred, CFO) We are focusing on supply chain efficiencies and vendor negotiations to limit exposure. We are scrutinizing costs and hiring, and maintaining discipline around GNA. (Trina Speer, CEO) We serve healthcare professionals, many of whom earn less than $100,000 annually. We prioritize affordability and price consistency, especially for core scrub wear. Price increases are a last resort as we focus on internal mitigation strategies.
Q: Are you seeing any changes in demand normalization, and how does it affect your outlook? A: (Trina Speer, CEO) We are seeing positive signs of normalization post-COVID, with increased repeat frequency and growth in both scrub and non-scrub wear. Active customers are up 4%, and AOV reached a record $119. (Sarah Altred, CFO) We haven't seen notable shifts in consumer behavior, though there is some softening demand from Canadian customers due to tariff concerns.
Q: How are tariffs affecting your fit initiative and customer experience improvements? A: (Trina Speer, CEO) The fit transition is on track and unaffected by tariff-related shifts. We are working with the same suppliers and adjusting capacity as needed without impacting our fit initiative.