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1 disruptive apparel IPO with a bright future

Figs (NYSE: FIGS) makes clothing specifically designed for healthcare workers, and to say the company’s growth has been impressive so far would be a massive understatement. In this Fool Live video clip recorded on September 15th, Fool.com employees Danny Vena and Matt Frankel, CFP, discuss what makes Figs such an exciting investment right now.

Danny Vena: The next recent IPO stock we’ll cover is my second favorite stock named after a fruit and that’s FIG, Ticker, FIG. FIG is not a household name, but it is taking the medical apparel world by storm. The company has built the largest direct-to-consumer platform for scrubs and other health wear and is a market leader in the move to digitization. As a result, the company markets and sells 98% of its products on its e-commerce site or through the mobile app.

What makes FIG so annoying is when you think of medical clothing, many people describe them as notoriously ill-fitting, uncomfortable, baggy, boxy and lacking in design and functionality, basically only with a focus on performance. But in 2013, Heather Hasson and Trina Spear started the company. They made some figure-hugging, comfortable scrubs and sold them to healthcare professionals straight from their cars in hospital parking lots. Obviously, this is an industry that was prone to disruption. To give you a complete picture, FIG increased its sales between 2017 and 2020 with an average annual growth rate of 146%.

Now, last year, sales grew to 138% and the company was already profitable. Now, this year, it has slowed down a bit. Net sales rose 58% in the second quarter and the company has posted a loss so far this year, but the majority of that can be attributed to costs related to its IPO. If you adjust that for these one-time expenses, the net profit rose by as much as 48%. The customer base is growing. The number of active customers has increased by 79%. The company has $ 164 million in cash and is not in debt.

This is another IPO stock I recently bought that I was quite interested in when I first read about it. It should be emphasized that the customers are ambassadors for the product. It’s a cult favorite among people who wear fig scrubs. This is one that the word of mouth is really driving the use of the product and I’m pretty excited about it.

Matt Frankel: I know we are running out of time, but I have to interfere with FIG. My wife is currently working a 12 hour shift in a COVID intensive care unit. Not a week goes by without a FIG envelope showing up on our doorstep. This is a huge opportunity. When I first looked at the IPO, I made the mistake of thinking this was a niche product. There are approximately 10 million healthcare workers in the US and 59 million worldwide. And they order scrubs a lot more often than you might think.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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