FIGS (FIGS) Q3 2025: Community Hubs to Triple, Non-Scrubware Hits 20% of Mix
FIGS is accelerating its omnichannel push, with three new community hubs set to open and non-scrubware now comprising a fifth of sales. The company’s strategy focuses on deepening wallet share among healthcare professionals and expanding internationally, while mitigating tariff headwinds through operational efficiency. Investors should watch for margin resilience as tariffs ramp and the full impact of new store formats on customer acquisition unfolds.
Summary
- Omnichannel Expansion: Three new community hubs will open in major metro markets, testing retail’s role in customer acquisition and retention.
- Product Mix Shift: Non-scrubware now represents 20% of revenue, with layering and accessory categories driving higher average order values.
- Margin Management Focus: Tariff pressures are being offset by freight, vendor, and SG&A efficiencies rather than price hikes.
Performance Analysis
FIGS delivered a multi-pronged growth story in Q3 2025, emphasizing both core replenishment-driven scrub sales and the rising contribution of non-scrubware apparel. The company remains a predominantly digital direct-to-consumer (DTC) brand, yet is actively testing physical retail with two community hubs and three more slated to open in Houston, New York, and Chicago by year-end. These stores are showing promise as both acquisition and retention vehicles, with over 40% of in-store transactions attributed to new customers.
International expansion continues to accelerate, especially in Mexico, Europe, and the Middle East, while mature markets like Canada and Australia are also showing renewed momentum. The Teams, B2B institutional uniform program, is positioned as a future growth lever, particularly outside the U.S. where institutional purchasing is more prevalent. On the cost side, FIGS is proactively managing tariff headwinds by optimizing distribution, outbound freight, and vendor relationships, with no immediate plans for broad price increases. Marketing spend is trending down as a percentage of sales, aided by improved customer acquisition cost (CAC) and return on ad spend (ROAS). Inventory growth is running slightly ahead of sales due to product mix and tariff-related stocking, but management expresses confidence in demand visibility and risk mitigation strategies.
- Retail Channel Experimentation: Community hubs are driving both new customer acquisition and brand engagement, with format learnings informing future rollout.
- Repeat Purchase Engine: About 70% of revenue is generated from repeat customers, underlining the replenishment and loyalty dynamics of the healthcare apparel market.
- SG&A Leverage Emerging: Distribution center transition costs are rolling off, and outbound logistics efficiencies are ahead of schedule, supporting margin preservation.
Overall, FIGS is leveraging its brand affinity and operational discipline to navigate a fragmented competitive landscape and a challenging macro environment, with a clear focus on sustainable, multi-channel growth.
Executive Commentary
"We're the largest digital brand with only two stores. So last year we did about 550 million in sales. And with essentially a store in Los Angeles and a store in Philly. We're really excited about building out more to come."
Trina Spear, Co-Founder & CEO
"We've really been working on building out our marketing. So I would say a few years ago, we were really just bottom of funnel. We've been working to invest in upper funnel. Last year, this year, building out to be more full funnel. And with that approach, we've seen efficiencies gain in both our CAC rates have been coming down. Our row has been going up."
Sarah Otrud, Chief Financial Officer
Strategic Positioning
1. Community Hub Rollout
FIGS is moving beyond pure-play e-commerce by opening three new community hubs, aiming to deepen local market penetration and foster brand loyalty among healthcare professionals. Early data shows these stores are highly effective at attracting new customers, with more than 40% of transactions from first-time buyers. The company is experimenting with store formats between 1,500 and 2,500 square feet, targeting profitability and scalable learnings for future expansion.
2. Product Diversification and Layering System
The non-scrubware category now accounts for 20% of sales, reflecting success in cross-selling underlayers, outerwear, compression socks, and footwear. Partnerships, such as with New Balance for footwear, and a focus on functional, healthcare-specific apparel, are increasing average order value (AOV) and share of wardrobe. The company’s layering system is designed to replace non-industry brands in hospitals, offering features like antimicrobial and liquid-repellent fabrics tailored for medical environments.
3. International and B2B (Teams) Growth
International sales are outpacing domestic growth, with the Teams B2B platform positioned as a key lever, especially in markets where institutional uniform purchasing dominates. Localization efforts—ranging from tailored marketing to regional ambassadors—are ramping, and management sees significant runway to build brand awareness and institutional relationships abroad.
4. Margin Management and Tariff Mitigation
Tariff exposure remains a headwind, particularly as 85% of sales are U.S.-based, but FIGS is offsetting these costs through freight optimization, vendor negotiations, and outbound logistics. The new distribution center, now running at 50-60% capacity, is expected to provide fixed cost leverage as volumes scale. Management is targeting adjusted EBITDA margins of 8.5%-9% for 2025, with a roadmap for further improvement in 2026.
5. Brand and Marketing Efficiency
Marketing strategy has shifted to a full-funnel approach, with upper-funnel investment (including Olympic partnerships) driving both awareness and efficiency. CAC is declining, ROAS is improving, and the active customer base—currently 2.7 million—remains a fraction of the total healthcare market opportunity.
Key Considerations
FIGS is in the midst of a strategic transformation, leveraging strong brand equity and a replenishment-driven model to expand across channels and geographies. The company is balancing growth investments with disciplined cost management as it seeks to widen its competitive moat.
Key Considerations:
- Retail Expansion Test: The impact of new community hubs on customer acquisition and profitability will be a key watchpoint for omnichannel strategy.
- Tariff Headwinds: Tariffs will progressively impact margins through 2026, requiring continued mitigation through operational levers.
- International Playbook: Early successes in new markets must be scaled with localized marketing and B2B penetration to drive sustained growth.
- Marketing ROI: Efficiency gains in CAC and ROAS are supporting lower marketing spend, but brand awareness remains well below potential.
- Inventory Discipline: Inventory growth is outpacing sales, largely due to product mix and tariff buys, but no major disruptions are anticipated.
Risks
Tariff escalation and macroeconomic volatility remain outsized risks, as U.S. exposure leaves margins sensitive to policy changes and cost inflation. The pace of retail rollout and international expansion introduces execution risk, while continued pullback in promotions could test top-line growth in a competitive market. Any missteps in inventory management or fit standardization could impact customer loyalty and working capital.
Forward Outlook
For Q4 2025, FIGS guided to:
- Three new community hubs opening in key U.S. cities
- Continued non-scrubware and international growth outpacing core scrubs
For full-year 2025, management maintained guidance:
- Adjusted EBITDA margin of 8.5% to 9%, with margin improvement targeted for 2026 as mitigation efforts scale
Management highlighted several factors that will shape the outlook:
- Tariff impact will increase sequentially through 2025 and into 2026, but cost mitigation levers are expected to offset much of the pressure
- Retail and international initiatives are early-stage but are expected to drive incremental growth and brand engagement
Takeaways
FIGS is leveraging its replenishment-driven model and brand affinity to expand across channels and borders, with a disciplined approach to margin management amid tariff and macro headwinds.
- Physical Retail as a Growth Lever: Community hubs are showing early promise for new customer acquisition and could become a scalable channel if profitability targets are met.
- Product and Channel Diversification: Non-scrubware and international sales are rising as a share of mix, with layering and B2B initiatives providing new growth vectors.
- Margin Resilience to Be Tested: Tariff mitigation and SG&A leverage are key to sustaining profitability as cost pressures mount into 2026.
Conclusion
FIGS is executing a multi-channel, multi-category growth strategy, with early evidence that retail, product diversification, and international expansion can drive incremental value. The company’s ability to manage margin headwinds and scale new initiatives will determine whether it can sustain its leadership and premium positioning in a fragmented market.
Industry Read-Through
FIGS’ results signal a broader shift in healthcare apparel toward direct-to-consumer and omnichannel models, with replenishment dynamics and high brand loyalty supporting recurring revenue streams. The success of community hubs and non-core apparel could spur similar moves by niche DTC brands seeking to deepen engagement and capture more wallet share. Tariff mitigation strategies and inventory discipline are increasingly critical for apparel players with U.S. exposure. The focus on functional, industry-specific apparel and B2B institutional sales may also influence adjacent uniform and workwear markets.