Introduction
When we think of DTC (Direct-to-Consumer) fashion brands, we tend to picture eyewear, running shoes, or athleisure. But one company took arguably the least fashionable category on earth—medical scrubs—and rebuilt it into a business generating roughly $440 million a year. That company is FIGS. Founded by Trina Spear and Heather Hasson, FIGS launched in 2013 after the co-founders noticed that healthcare workers were spending twelve- plus hours a day in scratchy, shapeless, commodity scrubs with no design intent whatsoever. They decided to apply the playbook of premium activewear to this neglected category: better fabric, better fit, better storytelling. In 2021 FIGS went public on the New York Stock Exchange (NYSE: FIGS), posting annual revenue of about $418 million in its IPO year and becoming one of the few vertical workwear brands ever to reach the public markets. Viewed through a Porter’s Five Forces lens, medical scrubs had long been a fragmented market with weak buyer power and scarce substitutes, meaning that whoever built brand awareness first would harvest the reward of redefining the category. How FIGS turned a single garment into a brand, and how it then ran into a profitability wall as growth stalled, is the question this analysis unpacks.
Financial Data: Slowing Growth and a Profitability Collapse
The latest filings paint a company standing at an uncomfortable crossroads. Full-year 2024 net revenue came in at roughly $440 million (estimated from quarterly data), meaning that three years after its IPO the topline has barely moved from the $418 million mark, an unusual stagnation in a fast-iterating DTC category. The quarterly trend is even more telling: Q1 2024 net revenue was $119.3 million, down 0.8% year over year, a rare outright decline for the brand. Tracking from AMZ123 and Xueqiu Finance suggests that FIGS’s post-IPO growth narrative was largely propelled by the pandemic-era surge in demand for medical supplies and the broader stay-at-home consumption dividend; once those tailwinds faded, the revenue curve quickly flattened. On profitability, 2024 gross margin was 67.6%, down 1.5 percentage points from the prior year. For a premium DTC brand, a 67% gross margin remains excellent, but the downward slope signals pressure in the cost structure— rising fabric and logistics costs on one side, and promotional discounting，eroding pricing on the other.
The truly alarming number sits below the gross line. Full-year 2024 net income was just $2.7 million, down 89.5% year over year—a decline that comes close to wiping out profit entirely. Even on an adjusted basis, 2024，adjusted EBITDA was $51.8 million with an EBITDA margin of 9.3%, which means the enormous gap between a 67% gross margin and a single-digit EBITDA margin is being consumed by operating costs. FXBaoGao’s annual report notes that FIGS’s expense structure has long carried a “triple high” of marketing, R&D, and administrative spend, and when revenue stalls these fixed costs cannot be compressed in step. Entering 2025, the situation did not improve. Q1 2025 produced a net loss, revenue growth slowed, costs rose, and inventory grew 14% year over year. Rising inventory is often an early warning sign for any apparel brand: product is not moving, yet warehouses are filling up, and the fallout is either markdowns that further damage gross margin or write-downs that hit profit directly. The only bright spot was a 13.6% sequential revenue increase in Q1 2025, indicating that seasonal demand still cycles back, but the year-over-year growth engine has clearly stalled.
Two cost-side details deserve attention. First, 2024 employee compensation fell 41% year over year, which the company attributed to a shift toward an RSU (restricted stock unit) compensation structure—effectively substituting equity for cash to retain talent, a cost-saving move that also hints at cash tightness and management’s conservative view of future cash flow. Second, marketing expense as a percentage of net revenue climbed to 26.2% (from 23.9% the prior year). With revenue essentially flat, a rising marketing ratio means each new customer is getting more expensive to acquire, as rising traffic costs and falling conversion rates compound. As of July 2025, FIGS had a total market capitalization of about $1.67 billion, well below its post-IPO peak, a clear signal that the market’s enthusiasm for the growth story has cooled. The company has explicitly focused on strategic initiatives to improve profitability, centered on optimizing inventory, controlling marketing spend, and increasing the share of revenue from repeat buyers, though results remain to be seen.
Brand Analysis: Pure DTC, Proprietary Fabric, and Community
The defining feature of FIGS’s business model is that it is pure DTC. The company sells through no wholesale channel whatsoever; every product moves only through its own website and stores. The advantage is data control—FIGS knows exactly what each customer bought, how many times they repurchased, and which pages they lingered on, first-party data that wholesale brands simply cannot match, and which also feeds precise product iteration and personalized marketing. Pure DTC also means no middleman between brand and buyer, so pricing power and brand narrative stay intact. The flip side, however, is customer acquisition cost. Without retail partners to distribute foot traffic, FIGS must pay to drive every visitor to its own site, which is exactly why marketing expense has crept up to 26.2% of revenue. As organic traffic plateaus, the ceiling of pure DTC acquisition becomes impossible to hide, which is also why Porter’s Five Forces rates the threat of new entrants as medium-to-high: the model is replicable, but the brand is not.
The core of the differentiation strategy is proprietary fabric technology. While commodity scrubs rely on cheap polyester-cotton blends, FIGS invests in self- developed fabrics engineered for wrinkle resistance, antimicrobial performance, four-way stretch, and moisture-wicking breathability, differentiating at the material level rather than just at the design level. This “fabric-as-moat” logic closely mirrors how Lululemon originally built its reputation around its Luon fabric—establishing irreproducibility at the foundational material first, then layering design, fit, and brand narrative on top. Paired with the fabric, FIGS launches new products at a high cadence and iterates quickly on fit, color, and functional details based on direct user feedback, creating a “small steps, fast cycles” product rhythm that gives existing customers something new to buy and lifts repurchase frequency. As of 2024, FIGS had built a loyal community of healthcare workers; the brand spotlights real clinicians’ stories, sponsors industry events, and amplifies the #wearfigs conversation on social platforms, turning a piece of workwear into an identity marker. This community-driven brand building is what makes FIGS’s premium pricing sustainable, and the moat that lets it hold its price band against cheaper competitors.
ShopFindBiz Perspective
Through the lens of a competitor analysis tool, FIGS is a textbook case of “high gross margin, high marketing, low net margin” DTC economics. First, on pricing strategy, FIGS scrubs are priced noticeably higher than legacy brands, which is the source of its 67.6% gross margin, but high pricing also means the repeat customer base is relatively fixed and new-customer conversion is hard. Scraping the store with ShopFindBiz reveals that FIGS concentrates its core SKUs on a handful of hero fits, expanding through color and size matrices—a “narrow SKU, deep inventory” structure that cuts both ways: hero products drive most revenue, but if the flagship falls out of favor, topline swings fast, and the 14% inventory build in 2025 already confirms this risk. Second, the ceiling of the pure DTC model is visible: with no wholesale channel to share inventory and acquisition burden, marketing expense is structurally sticky, and any slowdown in inventory turns immediately eats into profit. For sellers, monitoring FIGS’s listing cadence, inventory turns, and promotion frequency can give early warning of its profitability inflection point. Third, for sellers eyeing the medical apparel space, FIGS’s data points to opportunity in the niches it does not cover—veterinary, dental, pediatric care, or lower price tiers. Comparing pricing, listing cadence, and social buzz across similar stores with ShopFindBiz can surface these white-space opportunities quickly, avoiding a head-on clash with the category leader.
Final Thoughts
The FIGS story has two sides. On one side, it succeeded in redefining a neglected category: medical scrubs are no longer a “functional commodity” but a DTC brand fusing fashion, comfort, and professional identity, supported by proprietary fabric and community storytelling to reach a $440 million scale. On the other side, the 89.5% collapse in 2024 net income, the inventory buildup, and rising marketing costs expose the fragility of the pure DTC model once growth plateaus. For Shopify sellers and brand operators, the takeaway is clear: high gross margin does not equal high net margin; data control only matters when it converts into repeat purchases and lower acquisition costs; and community plus product iteration cadence is the real moat. When growth slows, the brands that hold their repeat-buyer base and turn marketing spend into long-term customer assets are the ones that survive the cycle. FIGS’s next chapter depends on whether it can open up its pure-DTC island into a more multidimensional channel and user structure without undermining its premium.
