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01/11 11:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: a slight revenue increase and active customer growth are positive, but declining margins, a flat gross margin outlook, and a net loss raise concerns. The Q&A reveals management's cautious approach to pricing amid tariff impacts and supply chain issues, suggesting limited short-term growth. The share repurchase program provides some support. Overall, the sentiment is neutral, as positive elements are offset by financial challenges and cautious guidance.
Net Revenues $124.9 million, up 5% year-over-year, driven by strong customer reception to new colors and products, and better performance during full-price sales days.
Average Order Value (AOV) $119, up 3% year-over-year, primarily due to a higher rate of full-price sales and higher average unit retail.
Active Customers 2.7 million, up 4% year-over-year, supported by efforts to bring back lapsed customers and stabilize acquisition and churn metrics.
Net Revenues per Active Customer $208, eased less than 1% year-over-year, reflecting stable customer engagement despite promotional changes.
Scrubwear Revenue Increased 5%, representing 80% of net revenues, driven by traction with limited edition styles and a good balance of color performance.
Non-Scrubwear Revenue Increased 4%, representing 20% of net revenues, impacted by changes in promotional strategy and inventory management.
Gross Margin 67.6%, down 130 basis points year-over-year, due to higher promotional performance and increased freight expenses, partially offset by fewer promotions.
Selling Expenses $32.7 million, 26.2% of net revenues, up from 23.9% last year, due to higher costs from the new fulfillment center and increased outbound shipping expenses.
Marketing Expenses $18.2 million, 14.5% of net revenues, unchanged from the prior year.
General & Administrative (G&A) Expenses $33.8 million, 27.1% of net revenues, down from 30.2% last year, due to lower stock-based compensation, partially offset by higher depreciation.
Adjusted EBITDA $9 million, with an adjusted EBITDA margin of 7.2%, compared to 10.9% last year, exceeding the outlook of 5.5% to 6%.
Net Loss $0.1 million, or diluted EPS of $0.00, compared to net income of $1.4 million last year.
Cash Position $251.2 million, slightly down year-over-year, reflecting share repurchases and higher CapEx from the fulfillment center.
Inventory $131.6 million, up 1% year-over-year, but down 27% from peak levels in Q1 2023.
Free Cash Flow $7.9 million for the period.
Capital Expenditures $1.3 million for the quarter, on track with a full year plan of approximately $5 million.
New Product Introduction: Introduced FORMx fabric, enhancing fit and style with new silhouettes like scrub leggings and wide-leg scrub pants.
Market Expansion: Plans to officially debut FIGS in Japan, targeting over 5 million healthcare workers, and entering South Korea in the second half of 2025.
Operational Efficiency: Adjusted EBITDA margin of 7.2%, exceeding the target of 5.5% to 6%, despite increased operational costs.
Customer Engagement: Successful reactivation of lapsed customers and strong performance during full-price sales days.
Strategic Shift: Focus on international expansion and TEAMS business, with a dedicated leader hired to drive growth in these areas.
Tariffs and Trade Policy: The recently imposed tariffs create risk for FIGS, with uncertainty regarding how much they will increase costs over time. The company is subject to a baseline 10% tariff, which is expected to significantly impact the cost of goods sold in 2025 and 2026.
Supply Chain Challenges: The majority of FIGS' production comes from Jordan and Vietnam, with a small percentage from China. The evolving global trade policy poses risks, and the company is exploring mitigation strategies, including canceling orders and diversifying suppliers.
Economic Factors: The company is navigating a dynamic macro environment with uncertainties around consumer demand and economic pressures. This includes the impact of tariffs on pricing and overall financial performance.
Promotional Strategy Changes: Changes in promotional strategy have led to adverse impacts on revenue performance, creating uncertainty in future revenue growth.
Inventory Management: There are challenges related to inventory growth rates, particularly in Q2, due to uncertainties in the trade environment and the need to work through older inventory.
International Expansion: FIGS plans to officially debut in Japan later this quarter, with a focus on supporting meaningful growth in 2026 and beyond. They are also set to enter the South Korean market in the second half of the year.
TEAMS Business Development: FIGS is evolving its TEAMS business to target new opportunities in concierge medicine and modern healthcare settings, with plans to hire dedicated team members and develop marketing assets.
Community Hubs: FIGS is committed to expanding its Community Hubs, with a new location in Houston and plans for two additional locations by year-end, aiming to enhance customer engagement.
Sustainability Initiatives: The 'Scrubs That Don't Suck' campaign aims to recycle old scrubs, promoting responsible customer acquisition and brand differentiation.
Product Innovation: FIGS is focused on driving new innovation in the scrubs market, including the introduction of FORMx fabric and new product styles.
2025 Revenue Outlook: FIGS expects net revenues for 2025 to be down in the low-single digit range year-over-year, maintaining a cautious outlook.
Adjusted EBITDA Margin: The adjusted EBITDA margin for 2025 is projected to be in the range of 7.5% to 8.5%, factoring in tariff impacts.
Q2 Revenue Expectations: For Q2, FIGS anticipates net revenues to be approximately flat year-over-year.
Inventory Growth Rate: A higher inventory growth rate is expected in Q2 due to uncertainties in the trade environment.
Capital Expenditures: Capital expenditures for the year are planned at approximately $5 million.
Share Repurchase Program: During Q1 2025, FIGS repurchased approximately $2.7 million worth of shares at a weighted average price of $4.73 per share, with $52 million available for future repurchases.
The earnings call presents a mixed outlook. Positive factors include revenue growth projections, international expansion, and community hubs. However, tariff pressures, reduced promotions, and unclear management responses on key metrics offset these positives. The Q&A section reveals concerns about margins and inventory. Overall, the sentiment is balanced, leading to a neutral stock price prediction.
The earnings call presents a mixed picture: a positive Q2 with revenue exceeding guidance and strong international growth, but cautious guidance for Q3 and 2025. The Q&A highlights concerns over tariffs, pricing, and reduced promotions impacting growth. The company prioritizes growth initiatives over share repurchases, indicating a conservative approach. Overall, the sentiment is neutral as positive elements are balanced by uncertainties and conservative guidance.
The earnings call presents a mixed picture: a slight revenue increase and active customer growth are positive, but declining margins, a flat gross margin outlook, and a net loss raise concerns. The Q&A reveals management's cautious approach to pricing amid tariff impacts and supply chain issues, suggesting limited short-term growth. The share repurchase program provides some support. Overall, the sentiment is neutral, as positive elements are offset by financial challenges and cautious guidance.
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