U.S. Markets open in 5 hrs 31 mins
  • Oops!
    Something went wrong.
    Please try again later.

FIGS co-founder: Workwear entails ‘very little inventory risk’

In this article:
  • Oops!
    Something went wrong.
    Please try again later.

FIGS Co-Founder & Co-CEO Trina Spear joins Yahoo Finance Live to discuss the company's earnings and the outlook for health care apparel.

Video Transcript

BRIAN SOZZI: --is out with a strong quarterly earnings report. The company beat estimates very strongly and came out here really and also had a strong earnings call. Let's get right into this quarter with FIGS co-ceo and co-founder Trina Spear. Trina, nice to see you here. We have a lot of time to get into the numbers, but I do want to start on this.

Inside our morning meeting this morning, I went to your site. I said, team, I like what you're selling. I want to buy some of these clothes. I got laughed at a little bit because they correctly pointed out, I'm not a doctor. Can someone like me buy clothes from your site? Would that be weird? And then if not, are you developing clothes for folks like me that want to wear what you're selling?

TRINA SPEAR: So, you know, we would love for you to buy apparel off our site. And, you know, we make the highest quality apparel we believe in the world. But we really do focus on health care professionals. You know, it's a community that's been underserved and overlooked prior to FIGS. And our entire mission at FIGS, it's to celebrate, empower, and serve those who serve others.

So we really are focused on our health care professionals that have dedicated their lives to saving lives, to helping patients, to curing diseases. They've led us through this pandemic, as you both know. So I think that is our focus. But we love that others love our products and happy to serve them as well.

BRIAN SOZZI: So you're-- unlike many other startups in retail, you're making money. And answer me this. Is the secret sauce to your business that 80% of the business is in 13 core styles?

TRINA SPEAR: That is a big part of why we've been successful. We are a uniform business. We are a workwear business. We have very little inventory risk. This-- but, you know, I think the bigger thing is that, you know, we have a mission. We have a community that loves us. They love our products. And they come back over and over and over again to replenish them. We are a replenishment driven business, which is rare, where we're retaining about 75% of our revenue in the following year. And that's really rare as you look across the D to C space.

And it's reflected in the numbers, right? You know, it's a really unique financial profile, where we've been able to couple incredible revenue growth with really incredible profitability. And you saw that in 2021 with 62% revenue growth coupled with 25% adjusted EBITDA margin. And to be able to do both at the same time, as you know, is incredibly rare.

JULIE HYMAN: Trina, it's Julie here. You talked about on your conference call not seeing any need to increase your prices. And can you explain that to us a little bit? Because obviously, input costs have been going up a lot. You guys, your stuff is-- a lot of it's synthetic, right? Which means it is petroleum-derived. We've seen what's happened with oil prices. So what's going to happen to your margins if you guys are not increasing prices?

TRINA SPEAR: You know, I think we have a really great understanding of our supply chain. We have our core fabrication. Our FIONx is a Poly Rayon Spandex. It's a beautiful fabrication that makes up about 90% of our production. And so with that level of manufacturing of one fabrication, we're able to really control and maintain our costing. We're able to work with our manufacturing partners and give them a level of predictability, consistency.

Because our business is so predictable, 98% of our sales are all online, direct-to-the-consumer. And so we're able to maintain that price and our costing. And I think what we'll see is, you know, when we have increased pricing, we haven't really seen any drop-off in demand. And so we'll continue to evaluate the inflationary environment going forward. But at this point, our goal is to keep our products affordable, accessible for our healthcare professionals, and get them the products they need to go out and do their jobs.

BRIAN SOZZI: Trina, I'm just going to build in our last segment a little bit with Lululemon. In the footwear space, in the healthcare market, Crocs has been the long dominant shoes or things doctors and healthcare professionals wear on their feet. Within your guidance for 2025, $1 billion sales target, does that include you making footwear?

TRINA SPEAR: You know, we can't say as of yet. We have an amazing partnership right now with New Balance, which amazing, where we co-developed our shoes for our healthcare, really with the healthcare professional in mind. They're incredibly comfortable and durable and are great on a 16-hour shift, as a healthcare professional.

But I think, you know, the Lululemon example is interesting in another way, because I think similar to FIGS, you know, they really created a market. And I think we're doing the same thing with what we're doing, really creating a market in a category that never existed. And so we're really excited about our future and our continued plans to that billion dollar plus target.

BRIAN SOZZI: 7% of the business, Trina, is international sales. What will that look like this year? And what markets do you plan to enter?

TRINA SPEAR: Yeah, we were really, really encouraged by our international traction. So we tripled the business, our international business in 2021. And it's still only 7% of our revenue. So really excited about our continued traction. And by the way, we're only in three countries. We're in UK, Canada, and Australia. We're going to be launching a number of new markets in 2022.

We're really excited about bringing FIGS to more healthcare professionals around the world. Whether you're living in Istanbul or Munich or Kentucky, you had a similarly bad experience as it related to your uniform. Not only the product, but also the experience. And so we're looking to really help and serve healthcare professionals around the world. There are 115 million of them around the world.

BRIAN SOZZI: Well, you can't say it, Trina, but I will for you. If you do decide to start making your own sneakers, I know they'll probably look a lot better than what Lululemon just came out with. We'll leave it there, FIGS co-founder, co-ceo Trina Spear, good to see you. We'll talk to you soon.

TRINA SPEAR: Thank you so much. Thanks for having me.