Why fig stock is down today

Actions of Figures (FIG -13.99%) took a dive today after the apparel company, best known for scrubs for healthcare workers, posted disappointing second-quarter results, including a drop in profits.

As of 2:42 PM ET, shares were down 12.5% ​​on the news.

Image source: Getty Images.

The fig challenges continue

Figs, which bills itself as the largest direct-to-consumer platform in medical apparel, said revenue rose 4.4 percent to $144.2 million, in line with estimates.

Gross margin in the quarter fell 210 basis points to 67.4% due to the change in product mix of limited edition equipment. Operating expenses rose 7% to $95 million due to higher sales and marketing expenses and the transition to a new fulfillment center.

Bottom line, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell from $18.9 million to $12.9 million and reported earnings per share of $0.01, compared to $0.04 dollars in the year-ago quarter and profitability estimates.

CEO Trina Spear expressed optimism, saying, “Our strong performance in the second quarter shows that our investments are paying off.”

Figs also announced a $50 million share repurchase authorization.

Can figs grow back?

Figs went public promising disruptive growth in medical apparel, but a few years later, that vision appears to be dead.

For 2024, Figs now projects only 2% revenue growth and modest adjusted EBITDA margins of 9.5% to 10%.

Steady growth at a company operating at break-even under generally accepted accounting principles (GAAP) is a recipe for further declines in stock price.

There’s little reason to bet on a fig comeback based on this report.