The healthcare apparel company issued another disappointing earnings report.
Shares of Figs (FIGS -14.42%) 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.
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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 projecting 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 a recipe for further stock price declines.
There’s little reason to bet on a Figs comeback based on this report.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
