Figs beats revenue expectations but higher freight costs cut into margins

By Liz Moyer

Investing.com -- Figs Inc (NYSE:FIGS), the maker of scrubs and other attire for healthcare workers, beat on third-quarter revenue expectations but said higher freight costs were cutting into its margins.

Shares of Figs fell 8.7% in after-hours trading. They are down 76% so far this year.

Revenue of $128.6 million beat expectations for $124.4M. Adjusted earnings per share of 2 cents met expectations.

The revenue is up 25.2% from the same period last year, the company said, citing an increase in orders from new and existing customers. 

The gross margin was 70.6%, a decrease of 210 basis points from the same period last year as the company paid for higher priced air freight and with the rising cost of ocean freight. It also cited promotional sales. 

Figs projects full-year net revenue of $495M, which would be up 18% from the prior year. It forecast its Ebitda margin at 16%. The third quarter Ebitda margin was 16.4%, down from 21.6% last year.

CEO Trina Spear said "With frequency trends continuing to slow largely due to sustained macroeconomic pressures, we are adjusting our plans to focus even more on product innovation and customer engagement strategies, while managing cost pressures. Importantly, our brand remains strong and we continue to gain market share as we strive to become the largest provider of scrubs and lifestyle apparel to the healthcare community.”