5xing FIGS by 2030

🧠 The Takeaways

We’re taking an Activist stake in FIGS to make it the $5B brand it should be.

1. Chase the fastest growth. Expand more internationally.

2. Finally get into wholesale.

3. Launch hospital gowns to expand into the Premium Hospital apparel vendor.

+ Coco April Update

LBAB! Community - Coco April Update

April was a grind month at Coco. 

Product: 

Massive launch: Segmentation. We rebuilt 80% of the segmentation functionality in Klaviyo. It’s table stakes for most brands, but it’s a complicated, intensive process to get there.

Growth:

We hustled to build pipeline + close more deals. I’m testing out new strategies through my LinkedIn to increase pipeline + brand awareness. We’ll see if this playbook can scale.

Team:

We stabilized the team and started building after onboarding a new Developer and Salesperson in March. They’re ramped and in the weeds. Now we have the baseline to expand the team. 

Financials:

Our delayed payments from Shopify finally cleared, so we’re finally out of cashflow hell. We need to clean up more over the summer, but we’re in much better cash shape.

I’m not consistently paying myself + haven’t recouped my initial working capital, but we’re “ramen profitable,” growing, and I’m excited about our direction.

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

FIGS, the premium Scrubs biz that blew up during the pandemic, is  brutally imploding in the public markets. After rejecting a take-private offer for $1B earlier this year, they’re spiraling.

• Share price: $4.04

• Market Cap: $656m

• L5 Performance: -88%

• P/E Ratio: 267x

FIGS’ baby profits are thinning. Revenue’s stalled out + all costs are increasing.

Financial Summary

TLDR Analysis: Tailwinds flipped to headwinds

• COGS (+7% YoY) rising faster than Rev (+2% YoY)  👎👎

• Sales & Marketing +14% YoY but only 2% Rev growth 😰

• Last year’s baby profits wiped out. FIGS risks becoming slow growth + unprofitable.

The product’s getting more expensive to make/sell.

All trends you don’t want to see. Especially as a public company. 

Silver lining: FIGS has $266m in non-inventory Assets against $132m in Liabilities, so it can weather a painful storm if needed.

Let’s Fix This Biz

Here are the 3 moves we’ll force FIGS to make to save themselves.

1) Expand more aggressively Internationally

The medical profession is a massive, rapidly growing market.

The global medical scrubs market is $54B with a 9.4% CAGR.

• 3.4m nurses w/ est 4.5m by 2030. 

• 1m doctors w/ est 3% CAGR

But FIGS US sales—85% of total—are -2% YoY. 

Rest-of-world (ROW) sales—15% of total—are +31%.

ROW’s still a small % overall, but it’s growing so quickly that its increase last year more than covered the US decline.

They have to bring the playbook overseas and focus on the fastest-growing markets (est by 2030):

• China/SE Asia: 6m total nurses 

• Middle East: 250k more nurses + doctors.

Being lucky in the right demographics/markets >>>> being skilled.

Takeaway: FIGS needs to double down on International while US sales slow.

2) Get into Wholesale

FIGS’ P&L is the perfect representation of why DTC only scales so far.

• Gross Margin (GM): 68% of Rev

• Sales & Marketing (S&M): 42% of Rev

• G&A: 26% of Rev

Net profit/EBITDA = GM - S&M - G&A

FIGS touting DTC as a “higher profit” channel is BS.

When you subtract the 42% of Rev spent on S&M, there’s only 26% of Rev left to pay for anything else.

Vs. a Retail-heavy biz, which will operate at a ~35% GM (retail buys at a lower price) and have significantly less S&M overhead for those sales. It all nets out at the same place.

The Net Income Margin will always default to a similar place. But DTC-or-die means passing up their next round of profitable growth and going at it alone.

Takeaway:  It’s time to take their head out of the sand + leverage distribution partners.

3) Launch Hospital Gowns

Hospital gowns are a $5B market, growing 7-12% per year. Another opportunity to provide luxury for wealthier medical patrons.

The fact that gowns don’t fit their current merchandising strategy shows everything wrong with their current GTM.

FIGS is an outfitter for Bougie medical experiences. 

Their obsession with selling to individual professionals is a misunderstanding of a key system.

Most hospitals make their employees pay for their own scrubs, with specific clothing rules. They already have partners that provide options for those requirements.

FIGS needs to wedge in further + be obsessed with moving as many units through a hospital as possible. 

(Like when Nike sponsors a college sport program. Logos + products everywhere on campus.)

Launching premium gowns that hospitals/medical facilities can buy as a differentiator is a key flywheel to sell more to existing customers.

+ selling more to existing customers is the First Rule of Biz.

Takeaway: Optimize around how customers use the product. Expand from there.

Final Thought

It’s hard Monday morning quarterbacking here. 

FIGS rejected an offer they thought was unfair and now (4mos later) have a stock price worth 35% below that offer.

The founder made the right long call. 

The medical macro trends indicate there’s a massive opportunity in the next 10 years.

But is a public company the right vehicle to get there?

US demand’s slowing. Global trade’s getting rockier. 

How much longer can FIGS have flat sales/no profits before the public markets lose faith?

The big, bold pivots they need to make will be brutal when they have to report quarterly.

Instead of staying public, evolving, and getting punished every quarter, should they have gone private? 

Not because that offer is worth more than they are now.

But because it would have given them the time and lack of scrutiny to make the multi-year investments they need to become the biz they should be.