FIGS (FIGS) Q3 2026 earnings review
FIGS keeps winning customers, but a supplier ban limits stock
FIGS, the maker of medical scrubs, kept winning customers even though a supplier ban left popular styles out of stock. Sales rose 26%, above its own plan of about 20%, and active customers increased faster for a fourth straight quarter. Finance chief Sarah Oughtred raised the yearly outlook again, but her plan has growth easing to about 15% next quarter.
| Revenue | $190.7M +25.7% from a year ago; plan was about +20% |
|---|---|
| Active customers | 3.2 million +14.3% from a year ago |
| Operating margin | 11.6% 6.4% a year ago |
| Full-year sales outlook | Raised to about +23.5% about +20% three months ago |
⚖️ Verdict: 🟢 Bullish
The story got better, because FIGS keeps adding buyers and lifted its yearly sales plan for a third time. One caution: sales topped the plan by the usual amount, which points to a cautious plan rather than a new trend. Oughtred also put gross margin near 67.5% this year and next without one-time tariff refunds.
The question now is how fast FIGS can grow once its January price rise stops lifting the yearly comparison. Either new buyers and fuller stock keep sales well ahead of the customer count, or sales settle near the pace of new customers. First-quarter results for 2027 will tell.
🐂 Bull Case
FIGS Adds Customers Faster for a Fourth Quarter
FIGS counts anyone who bought from it in the past 12 months as an active customer. Nurses and doctors replace scrubs often, so each new buyer tends to come back. Finance chief Sarah Oughtred said growth in that group sped up for a fourth straight quarter.
The scrub maker ended September with 3.2 million active customers, 14.3% more than a year earlier. A year before, that rate stood at just 4%. Each buyer also spent more, and Oughtred credited the January price rise, a richer product mix and lower discount and return rates.
- Average order value: $126, up 10.5% from a year ago
- Yearly sales per active customer: $236, a company record, up 12.9%
- Active customer growth: 14.3%, after 13.2% in the second quarter
This matters because more buyers, not only higher prices, now carry sales. The price effect fades once the January increase is a year old, but a wider customer base keeps paying.
What to watch: active customer growth in the fourth-quarter report, due in February. A rate that holds near 14% as the price effect fades would show that buyers, not pricing, drive the business.
Spending Grew Far Slower Than Sales
FIGS held costs back while sales climbed, so more of each dollar reached profit. The release credited "fixed cost leverage across general and administrative, marketing, and selling expenses" for the gain.
- Marketing: 13.4% of sales, down 2.1 percentage points from a year ago
- Overhead, or general and administrative costs: 21.0% of sales, down 3.5 percentage points
The EBITDA margin excluding one-offs, a profit measure before depreciation and stock pay, reached 16.5%. By our math, tariff refunds on goods sold in the quarter supplied about 1 point of it. Finance chief Sarah Oughtred also expects a higher selling cost rate next quarter, because of supplier changes and freight.
What to watch: the 2027 profit plan in February. Chief executive Trina Spear said cost discipline will continue next year, so a higher margin plan would show the savings last.
Growth Comes From Abroad and Beyond Scrubs
FIGS earns most of its money from US scrubs. Two smaller parts now expand faster: sales in other countries, and non-scrub items like jackets and shoes.
Sales outside the US rose 51.4% to 19% of the total. Most came from countries FIGS already served, with "nearly 90% of that growth coming from our existing comp markets", the company said. Non-scrub sales climbed 34.6%, helped by the CHARxMACY, pins and jewelry that chief executive Trina Spear called "a natural extension of the uniform".
The other side holds that both lines carry thinner margins than US scrubs. The release, however, blamed the gross margin dip on "outsized improvements in returns processing in the prior year and higher inventory reserves", not on mix.
What to watch: the share of sales from abroad in the fourth quarter. A share above 19% would show growth that no longer leans only on the US market.
🐻 Bear Case
Plan Has Growth Slowing to 15% Next Quarter
Sales growth topped 25% for four straight quarters, but the plan for the fourth quarter calls for about 15%. That quarter faces a hard comparison, because sales jumped 33% a year ago.
The plan did improve from about 10% three months ago. Finance chief Sarah Oughtred said stockouts also held back the third quarter, which could have come closer to the second quarter's pace with normal supply.
The bigger test arrives in early 2027, when the January price rise stops counting in the comparison. Chief executive Trina Spear described "a foundation for sustainable top- and bottom-line momentum", yet the plan has growth slowing by about 11 percentage points from the third quarter.
What to watch: first-quarter 2027 sales growth, the first quarter without the price rise in the comparison. It will show how much of the gain comes from buyers rather than prices.
Gross Margin Falls Once Tariff Refunds End
Gross margin is the share of sales left after paying for the products. FIGS now plans 69.9% for 2026, a figure that includes one-time refunds of US tariffs the Supreme Court struck down in February.
Finance chief Sarah Oughtred said those refunds add about 2.5 percentage points this year. Without them, she put the margin near 67.5%, this year and next. In the third quarter, the cost of goods rose to 30.7% of sales from 30.1%.
- Third-quarter gross margin: 69.3%, against 69.9% a year ago
- Without refunds, by our math: 67.4% in the second quarter, 68.3% in the third
- New US tariffs since July: 10% to 12.5% on imports from about 60 countries
The investor slides promise a "Structurally high gross margin", yet Oughtred's figure for next year sits about 2.4 points below the 2026 plan. Vietnam, where FIGS moved production from Jordan, brings a different duty structure and higher early costs, she said.
What to watch: fourth-quarter gross margin, due in February. A result near 67.4%, which the yearly plan implies by our math, would put next year's start close to Oughtred's estimate.
Supplier Ban Leaves FIGS Short of Stock
In June, US customs banned imports of garments from FIGS' partner factory in Jordan, through a step called a withhold release order. The scrub maker moved that production to other suppliers, mainly in Vietnam.
Finance chief Sarah Oughtred said stockouts hit the back half of the third quarter, and inventory fell 19.8% from a year earlier. "Our demand is far outstripping our supply right now," chief executive Trina Spear said. Site traffic rose by about a third, she added, while sales gained 26%.
Spear said the fourth quarter takes the worst of it, and that the outlook already allows for this. She expects some effect to last into the second quarter of 2027.
What to watch: year-end inventory, which Oughtred expects to stay below last year's before rebuilding in 2027. A rebuild on time would let FIGS sell into demand it cannot serve today.
Risks this quarter didn't answer
Three older concerns got news this quarter. Only the securities lawsuit reached an end, and each other item below names the reading that would settle it.
- Share dilution: weighted diluted shares rose 6.9% from a year ago, after 12.8% in the second quarter. Finance chief Sarah Oughtred said buybacks have "covered all of the dilution" this year; a falling diluted count in 2027 would close the issue.
- OOG: on November 3 FIGS signed a collaboration agreement with OOG, an online education platform for healthcare workers. FIGS executive chairman Heather Hasson founded and runs it, and FIGS holds a stake carried at $27.7 million; published terms would show who gains.
- Securities lawsuit: an appeals court upheld its dismissal on August 11, and courts then dismissed the related suits. The risk is closed.
👓 Other Themes
FIGS Plans Four New Stores This Quarter
FIGS plans to open four more Community Hubs, its stores for healthcare workers, this quarter in Scottsdale, Miami and near Washington and San Jose. That would bring the total to nine. Chief executive Trina Spear said stores open a year grew sales by double digits, and that new stores pay back their cost well within two years.
A Rival Closes Stores as Healthcare Hiring Grows
Scrubs & Beyond, a long-standing scrubs retailer, is shutting more than 100 locations, chief executive Trina Spear said on the call. Hiring also helps: the Bureau of Labor Statistics projects healthcare will add about 37% of all new US jobs over the next decade. FIGS has not said how many of the rival's customers it has won.
💲 Other KPIs
Cash generation jumped: by our math from the nine-month figures, free cash flow reached $51.2 million, against $0.5 million a year ago. Smaller stock purchases and later payment of supplier bills helped, and the tariff refunds arrived in full. The quarterly cash margin has now stayed above 20% for two quarters in a row.
The cash pile hit a record, up 37% from a year ago, after about $60 million went to buybacks and staff share-award taxes this year. The healthcare apparel brand carries no debt. Its board added $100 million of buyback room in August, leaving $105.3 million unused.
Spending on equipment, software and store fit-outs climbed to about 3% of sales, as four Community Hubs prepare to open. Nine-month spending doubled from a year earlier, by our math. The sums stay small next to the cash the business now produces.
🔮 Guidance
Raised. The plan now has fourth-quarter sales about 15% above last year's, or roughly $232 million by our math. The comparison quarter grew 33%. FIGS has topped every quarterly target it set since early 2025, by about 6 points on average. If the pattern holds, growth would land near 21%.
Raised, for a third time. The yearly forecast now calls for sales of roughly $779 million by our math. It leaves the same fourth quarter as the quarterly plan, so no hidden gap remains. February's starting range was 10% to 12%. The first two raises added 4 and 5 points, and this one added 3.5.
Raised. The company's preferred profit measure, before depreciation and stock pay, should reach about 15.8% this year. By our math, that leaves about 17.7% for the fourth quarter. The same quarter earned 13.2% a year earlier. Part of the gain comes from tariff refunds on goods sold this year, which FIGS keeps in this measure.
Raised. Finance chief Sarah Oughtred now expects about 69.9% for the year, citing full-price selling, a better product mix and less air freight. By our math, that leaves roughly 67.4% for the fourth quarter. That is well above the 62.9% of a year ago, when the scrub maker wrote off $5.6 million of stock.
Raised. The outlook now calls for an operating margin of about 12% this year. By our math, that implies about 13.6% in the fourth quarter. A year earlier the quarter earned 9.3%. The finance chief expects marketing to take a smaller share of sales, because last year's quarter carried early Winter Olympics spending.
❓ Key Questions
How much fourth-quarter revenue will the Jordan ban cost?
Finance chief Sarah Oughtred said stockouts held back the third quarter and limit special-edition stock into the fourth. A dollar estimate of lost sales would show how much growth returns once supply recovers in 2027.
How fast will order values grow after the price rise?
The January price increase stops lifting the yearly comparison in early 2027. FIGS should split the 10.5% order-value gain between price and the effects of mix, discounts and returns.
What does FIGS give and get in the OOG deal?
OOG's founder is FIGS' executive chairman, and chief executive Trina Spear sits on its board. Shareholders need the terms of the November agreement and the return FIGS expects on its stake.
How large is TEAMS, the business serving hospitals and clinics?
Spear said TEAMS sales grow faster than the company as a whole and named Bupa Dental Care and European Wax Center as partners. A revenue figure would show whether institutions can matter to growth.
Do the higher stock reserves relate to Jordan-made goods?
Higher reserves for unsold stock cut third-quarter gross margin, and the allowance reached $6.5 million. FIGS should say whether it expects to write off goods it can no longer import.