Figs (FIGS): The Scrubs Company Acting Like a Tech Brand

Every few years, the market produces a business that looks nothing like its sector.

FIGS (NYSE: FIGS) is technically “apparel,” but its economics look closer to a software company than a clothing brand. It’s also a Strong Buy according to our Zen Ratings system.

And yet the stock trades like a forgotten small-cap retailer.

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This mismatch between perception and reality is why I’m looking at FIGS as an opportunity.

A Massive, Recurring Market Hiding in Plain Sight

Scrubs aren’t fashion. They’re workwear … which means they’re required, replaced frequently, purchased year-round, and immune to recessions.

The global healthcare apparel market is over $90 billion, and for decades it’s been controlled by legacy wholesalers selling boxy, low-quality scrubs with zero brand identity.

Meanwhile, FIGS has created the first premium scrubs brand. Before FIGS, healthcare workers had two choices:

1. Cheap, shapeless scrubs
2. Slightly more expensive shapeless scrubs

FIGS brought:

• modern fits
• performance fabrics
• bold branding
• drop culture
• a DTC model
• strong social presence

To the outside world, they look like an apparel company. But to nurses and doctors? FIGS is the Lululemon (NASDAQ: LULU) of healthcare … but with much more growth potential. That’s why it’s scoring a B in our Growth Component Grade, which tracks sales acceleration, EPS growth, profit margin improvements, and more. Meanwhile, LULU is scoring a D in Growth.

FIGS is also scoring Bs in Sentiment and Financials:

Learn more about how we like to play growth stocks here.

A Customer Base You Couldn’t Engineer If You Tried

The best thing about FIGS is who their customers are:

Healthcare workers with stable incomes and built-in repeat purchasing.

Nurses often own:

• 5-10 pairs of scrubs
• multiple under-scrub tops
• compression socks
• lab coats
• warm-up jackets

They replace them regularly because the job is physically demanding.

Strong Margins in a Sector With Almost None

This is where FIGS starts looking like a tech business:

• 60%+ gross margins at times
• 20%+ EBITDA margins during growth phases
• Low SKU count = operational discipline
• DTC distribution = very little margin leakage
• No wholesale markdown cycles
• Low return rates

In a retail universe where most DTC companies lose money, FIGS is a profitable outlier.

Even through macro pressure, supply-chain inflation, and sector-wide DTC meltdowns, FIGS remained:

• Free cash flow positive
• Debt-free
• Margin-resilient

That’s not normal for an apparel brand … and that’s the point.

The Real Bull Case: They’re Just Getting Started

FIGS today is primarily the scrubs company.

But the upside comes from the categories they’re not in yet, or are just beginning to touch. This is the untapped growth I was getting at earlier … opportunities like:

• Lab coats
• Outerwear fleece for hospitals
• Footwear & clogs (a massive market)
• Surgical caps & accessories
• Underscrub layers
• International scrubs markets
• “Off-shift” lifestyle apparel
• EMS, dental, veterinary uniforms

These are natural extensions of a brand nurses already trust.

If FIGS becomes the standardized premium uniform across hospitals globally, the company moves from niche brand specializing in one clothing article to category owner.

International Growth = The Hidden Call Option

Finally, most investors also miss this: 90%+ of FIGS revenue still comes from the U.S.

But healthcare uniforms are universal … The UK, EU, Canada, Australia, and the Middle East all have massive scrub-wearing workforces.

If FIGS cracks even one major foreign healthcare system (e.g., NHS nurses), the revenue potential is enormous.

Domestic success is proven. International success is the free upside.

My Take

The thesis with FIGS is that it’s building the uniform of the global healthcare workforce: a massive, recurring market that legacy companies have ignored.

With a strong brand, sticky customers, high margins, and real profitability, FIGS is one of the most interesting “quiet compounders” in consumer discretionary.

Click here to add it to your watchlist. 

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