Total Retail is out with its top 50 fastest-growing retailers list – Boot Barn tops the list with 67% growth from 2021 to 2022. Browsing the rundown, I got stuck on number 19, Figs, a brand I’d never heard of but with growth upwards of 21% and over half-a-billion in sales, I needed to do the research. Company co-founder and co-CEO Trina Spear answered my call.
Figs outfits healthcare professionals with the scrubs, pants, lab coats and other workwear necessities needed in their job, including work-appropriate sneakers in collaboration with New Balance. It competes in a narrow $79 billion niche in the much larger workwear market, valued at nearly $300 billion worldwide. Pilot Jacket
The company discovered the segment through one of those happy accidents that can happen at any time. “My co-founder and best friend Heather Hasson was sitting with her friend, a nurse at Cedar Sinai who was wearing these awful boxy scrubs with the size on the back. A discussion ensued about her scrubs and Heather said she’d find her something better,” Spear explained, and that’s what they did.
Neither founder came from the fashion or the healthcare profession – Spear from investment banking, and Hasson was a serial entrepreneur. Together they saw the whitespace in the medical apparel industry that industry insiders were blind to.
Insiders believed their customers were content with the same-old generic scrubs sold in the same-old way. Spear and Hasson knew better.
Unlike other medical wardrobe suppliers, which offer baggy, ill-fitting, uncomfortable clothes with absolutely no style, Figs has become the Lululemon of scrubs.
Figs offers body-conscious, style-forward designs with innovative fabrics for easy-care, long-wear and comfort with four-way stretch, plus anti-odor, anti-microbial and moisture-wicking properties. The styles are also functionally designed with plenty of pockets to hold everything medical professionals need to do their jobs.
And also distinctive from its competitors, Figs sells exclusively direct-to-consumer, not in out-of-the-way strip mall stores where medical apparel might be sold next to bedpans, knee braces and other medical supplies.
Figs created a virtual destination that’s always open whenever healthcare professionals can fit shopping into their busy schedules.
“Our main goal is to make the lives of healthcare professionals better. We’re the brand that shows up every day to make sure they have what they need to do their jobs,” Spear shared. “We’ve built a brand in an unbranded, commoditized market.”
The company’s stated mission is “To celebrate, empower and service those who serve others,” and if its financial results are a measure of that service, it is doing it quite well. Net revenues nearly doubled from $263.1 million in fical 2020 to $505.8 million in fiscal 2022.
It also was profitable in 2022, to the tune of $22.1 million, up from a $9.6 million loss the year before. For fiscal 2023, it guides on revenues growing mid-single digits, but CFO Daniella Turenshine said in a statement that is “not representative of the growth we believe we can achieve long term.”
And Spear added, “We believe we have the scale and balance sheet to take our business to the next level, making strategic, disciplined investments in our future as we aim to double our annual net revenues to $1 billion.”
Surely, it got a bounce from the pandemic, but revenues were up 9% in first quarter fiscal 2023, and it sees blue skies ahead by capitalizing on its established competitive strengths and continuing to expand its reach to the 118 million healthcare workers across the globe.
“It doesn’t matter if you’re a healthcare professional in Kentucky, Turkey or Mumbai; you have the same work apparel needs, and we’re the brand that stands alongside them wherever they are,” Spear said. First quarter international revenues were up 45% year-over-year.
In the U.S., where it got its start in 2013, Figs has already reached over 10% of its total addressable market of 20 million healthcare workers. Active customers in the first quarter totaled 2.4 million, which grew from 1.5 million in March 2021 right before it went public.
And it’s still got a long runway, especially among male professionals, who make up 25% of the workforce but less than 20% of the company’s revenues. Full disclosure: my son is an ICU nurse, so I know much about his workwear needs, though we never talked brands until I asked him about Figs.
Plus, all those committed Figs customers are clamoring for their Figs fix for other lifestyle needs, like outerwear, underscrubs, activewear, loungewear, compression socks and footwear. Non-scrubwear revenues, including lab coats, are nearing 20% of revenues and advanced 14% year-over-year.
As impressive as Figs early results are, all that pales in comparison with the opportunity ahead as it leans into its distinctive and differentiated competitive advantages:
Figs has only scratched the early-adopter surface of its total addressable market. And once more professionals learn about the Figs comfort and style advantage, high customer retention and repeat purchases are virtually guaranteed.
“We help professionals look good and feel good on their 12-hour, 16-hour and sometimes double shifts. They look put together and professional throughout, not sloppy,” Spear related.
Some 70% of company revenues come from repeat customers. “Our customers come back over and over again to replenish their wardrobe. And we launch new products every week on a Tuesday or Thursday, and healthcare professionals on the night shift dial in at midnight to see what’s new. A lot of times, new styles sell out in a day,” she said.
When just one nurse or doctor shows up at work in Figs, they stand out, sparking conversation. “Our customers are walking billboards. They are acquiring our next customer for us because they are trusted colleagues. We don’t have to pay for that,” Spear said
Some 60% of Figs’ business comes through word-of-mouth, the most effective and least costly means to acquire new customers.
Once healthcare professionals experience the Figs difference, they never want to go back to generic scrubs. “Nobody wants to wear a bad experience for 14 hours a day. We give them a good experience every hour and every day,” Spear shared.
About 85% of professionals are responsible for buying their own scrubs for work, like my ICU nurse son, so Figs can enjoy a virtual monopoly on their entire work wardrobe at an affordable price of $38 for a top $48 for a pair of pants. And because of the nature of their work, professionals may need to change not just every day, but multiple times per day.
What brand wouldn’t want to be the sole provider of their customers’ entire work wardrobe?
As effective as online has been for Figs, it recognizes that some potential customers still need to touch, feel and try on the brand. It’s tested the opportunity for brick-and-mortar expansion in pop-up stores. One in New York City had a line of people waiting down the block to get their chance to try Figs.
That gives the company confidence that brick-and-mortar is the next logical step and it will be opening its first permanent location in Los Angeles’ Century City Mall in the third quarter, with more to follow. The stores will become destinations not just for scrubs, but for its expanded non-scrub ranges and a place to build and support the healthcare professional community.
The company makes supporting the healthcare community a priority. Last year, it donated $620,000 to various medical centers and related causes, plus its on-going Threads For Threads initiative donates scrubs to professionals in underserved countries where proper healthcare uniforms are lacking. Last year over 200,000 Figs were donated through the program.
Currently, the company sees accessing the 15% of healthcare professionals who are provided scrubs through their employer as another big opportunity. It’s Teams platform makes bulk ordering simple with logo embroidery for institutional branding.
Figs mindfully and intentionally set out to disrupt the traditional healthcare apparel market with innovative products that performed better, felt better, and looked better.
Its innovation didn’t go unnoticed. One industry giant, Strategic Partners Inc (SPI) that does business under Careismatic Brands, filed a lawsuit against Figs in 2019, claiming that the company made false statements about its product and charitable efforts.
Figs took the case all the way to a three-week jury trial that unanimously found none of Figs’ advertising claims were false, misleading or deceptive, resulting in the case being settled without payment or other obligations.
However, in a statement following the settlement, SPI felt vindicated to a point. “The facts and evidence uncovered during the litigation made it abundantly clear that FIGS’ marketing claims that were the focus of the case were unauthorized, misleading and deceptive. Following the filing of the litigation, FIGS ceased making those claims.”
Spears saw it differently. “It was a landmark case of an old, entrenched industry player going after the new disruptive company startup.”
Securite Series “Innovation is Figs’ north star, and we’re going to keep doing what we are doing going forward,” she continued. “We still have a lot of work to do to serve healthcare professionals, who we call ‘Awesome Humans’ because they are.”