FIGS’s SWOT analysis: healthcare apparel stock shows strength amid cautious outlook

FIGS, Inc. (NYSE:FIGS) has demonstrated remarkable resilience in the healthcare apparel market, with recent quarterly performances exceeding expectations despite maintaining a cautious stance on full-year projections. The company’s focus on stylish, functional scrubs for healthcare professionals has created a distinctive market position, while its direct-to-consumer business model continues to drive customer engagement and sales growth across regions.

Company overview and market position

FIGS operates in the U.S. Specialty Retail, Apparel & Footwear sector, focusing primarily on premium healthcare apparel. The company has carved out a niche by redesigning traditional medical scrubs with an emphasis on style, comfort, and functionality. This approach has resonated with healthcare professionals seeking alternatives to conventional workwear options.

The company’s market capitalization has grown substantially in 2025, nearly doubling from approximately $0.75 billion in May to $1.41 billion by November. This growth reflects increased investor confidence in FIGS’s business model and future prospects, despite the company’s own conservative outlook.

FIGS employs a direct-to-consumer business model that eliminates traditional retail intermediaries. This approach allows the company to maintain closer relationships with customers, gather valuable feedback, and respond more quickly to changing preferences in the healthcare apparel market.

Recent financial performance

FIGS reported strong third-quarter results for 2025, with sales exceeding expectations and adjusted EBITDA beating consensus estimates. This performance was driven by robust sales growth across different regions and improved gross margins. The company also benefited from lapping previously elevated operational expenses, which contributed to enhanced profitability.

This strong momentum followed an equally impressive first quarter, where FIGS surpassed its own sales and adjusted EBITDA guidance. The positive growth trends spanned various regions and product categories, demonstrating the broad appeal of the company’s offerings.

The consistent outperformance in both quarters suggests FIGS has successfully addressed previous operational challenges while continuing to expand its customer base. The normalization of operational expenses compared to previous high levels has positively impacted profitability metrics, allowing for improved margins.

Guidance and outlook

Despite strong quarterly performances, FIGS has maintained a cautiously conservative stance regarding its full-year 2025 guidance. Following the third-quarter results, the company revised its sales and EBITDA guidance upward for the fourth quarter of 2025, indicating confidence in continued strong performance through year-end.

This upward revision presents an interesting contrast to the company’s full-year 2025 guidance issued earlier in the year, which anticipated a low-single digit decline in sales. The discrepancy between quarterly outperformance and conservative full-year projections suggests FIGS management may be strategically managing expectations while navigating potential market uncertainties.

The positive momentum carrying into the fourth quarter of 2025 indicates that demand for FIGS products remains robust. This sustained growth across multiple quarters suggests the company’s value proposition continues to resonate with healthcare professionals.

Growth strategies and initiatives

FIGS has been actively expanding its product range beyond its core scrubs business. This diversification strategy aims to capture additional market share within the broader healthcare apparel and accessories segment, potentially reducing the company’s dependence on a single product category.

Regional expansion represents another key growth avenue for FIGS. The company has reported strong sales growth across different geographical areas, indicating successful market penetration beyond its initial core markets. This geographical diversification helps mitigate risks associated with regional economic fluctuations.

Operational efficiency improvements have been a significant focus area, contributing to the enhanced gross margins observed in recent quarters. By optimizing its supply chain, production processes, and inventory management, FIGS has been able to improve profitability while maintaining product quality and customer satisfaction.

Bear Case

How might FIGS’s dependence on the healthcare sector impact its long-term growth potential?

FIGS operates primarily within the healthcare apparel niche, making it highly dependent on trends and developments specific to the healthcare industry. This concentration exposes the company to sector-specific risks that could limit its growth ceiling.

The healthcare workforce grows at a relatively predictable rate, creating natural constraints on market expansion. Unlike fashion retailers that can target broader consumer segments, FIGS faces a more defined total addressable market. This limitation may explain the company’s conservative full-year 2025 guidance projecting a low-single digit sales decline despite strong quarterly performances.

Additionally, healthcare spending and employment can be affected by broader economic factors, regulatory changes, and healthcare reform initiatives. Economic downturns or policy shifts that impact healthcare employment or spending could directly affect demand for FIGS products.

The company’s efforts to expand its product range beyond scrubs represent an acknowledgment of this challenge, but successfully diversifying while maintaining brand identity presents its own set of difficulties.

What challenges could FIGS face in sustaining its margin improvements?

While FIGS has recently benefited from improved gross margins and normalized operational expenses, several factors could pressure these gains moving forward.

Input cost volatility, including materials and labor, could erode margin improvements. As a premium apparel brand, FIGS must maintain high-quality standards while managing production costs. Global supply chain disruptions or inflation in manufacturing inputs could squeeze margins if the company is unable to pass these costs to consumers through price increases.

The direct-to-consumer model that has served FIGS well also comes with significant customer acquisition and retention costs. As the company expands into new regions and product categories, marketing expenses may increase to build brand awareness and drive adoption. These investments could temporarily pressure margins even if they ultimately drive long-term growth.

Competition in the healthcare apparel space is intensifying as traditional workwear brands and new entrants recognize the market opportunity FIGS has demonstrated. Increased competitive pressure could force pricing adjustments or higher marketing expenditures that impact profitability.

Bull Case

How does FIGS’s direct-to-consumer business model create sustainable competitive advantages?

FIGS’s direct-to-consumer approach eliminates traditional retail intermediaries, creating several strategic advantages that support long-term growth and profitability.

The model enables FIGS to capture higher margins by avoiding wholesale markdowns and retailer commissions. This financial benefit provides greater flexibility for product development, marketing investments, and pricing strategies while maintaining healthy profitability.

Direct customer relationships generate valuable first-party data on purchasing patterns, preferences, and feedback. This information allows FIGS to refine product designs, identify emerging trends, and create targeted marketing campaigns with greater precision than competitors relying on third-party distribution.

The direct model also facilitates rapid product iteration based on customer feedback. FIGS can quickly adjust designs, introduce new products, or discontinue underperforming items without the constraints of traditional retail buying cycles or inventory commitments.

These advantages create a virtuous cycle: better products lead to stronger customer loyalty, which generates more data and feedback, enabling further product improvements and more effective marketing, ultimately driving sales growth and margin expansion.

What opportunities exist for FIGS to expand beyond its core scrubs business?

FIGS has significant growth potential through expansion beyond its foundational scrubs category into complementary healthcare apparel and accessories.

Healthcare professionals require various specialized garments beyond scrubs, including lab coats, under-scrub layers, outerwear, and footwear. By leveraging its brand reputation and existing customer relationships, FIGS can capture additional share of wallet from current customers while maintaining its premium positioning.

The company’s direct-to-consumer infrastructure and customer data provide valuable insights for successful product extensions. Understanding how healthcare professionals use different garments throughout their workday allows FIGS to identify unmet needs and design solutions that maintain the brand’s emphasis on style, comfort, and functionality.

International expansion represents another significant opportunity. Healthcare is a global industry with similar professional apparel needs across markets. FIGS’s strong sales growth across different regions demonstrates the transferability of its value proposition to new geographical markets.

By methodically expanding both its product range and geographical reach, FIGS can continue growing even if its core scrubs market approaches saturation in existing regions.

SWOT Analysis

Strengths

• Unique position in healthcare apparel market with focus on style and functionality
• Direct-to-consumer business model enabling stronger customer relationships
• Robust sales growth across different regions
• Improved gross margins driving profitability
• Normalization of previously elevated operational expenses
• Strong quarterly performance exceeding expectations

Weaknesses

• Dependence on healthcare sector demand trends
• Conservative full-year guidance despite strong quarterly results
• Potential challenges in scaling operations efficiently
• Limited addressable market compared to broader apparel retailers

Opportunities

• Product range expansion beyond core scrubs business
• International market penetration and growth
• Enhanced customer loyalty through direct relationships
• Margin improvement through continued operational efficiency
• Data-driven product development and marketing

Threats

• Increasing competition in the healthcare apparel space
• Potential market saturation in core product categories
• Industry-wide challenges reflected in neutral industry outlook
• Possible economic factors affecting healthcare employment
• Input cost volatility affecting production expenses

Analyst Targets

• Barclays Capital Inc. (November 10, 2025): Equal Weight rating, $9.00 price target
• BTIG (October 14, 2025): Buy rating, $9.00 price target
• Barclays Capital Inc. (May 13, 2025): Equal Weight rating, $5.00 price target

This analysis is based on information available through November 17, 2025, drawing from analyst reports published between May and November 2025.

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