FIGS Q1 2025: Unpacking Contradictions in Promotional Strategy, Customer Engagement, and International Growth

Promotional strategy, customer reactivation and engagement, tariff mitigation and pricing strategy, international market growth strategy are the key contradictions discussed in FIGS's latest 2025Q1 earnings call.



Revenue and Customer Trends:
- FIGS, Inc. reported revenues of $124.9 million for Q1 2025, exceeding expectations by growing 5% year-over-year.
- The increase was driven by strong gains during full-price days and better-than-planned performance during reduced promotional days, alongside a return to positive growth in the U.S. and a record average order value (AOV) of $119.
- The company also saw ongoing momentum in reactivating customers and stabilizing both acquisition and churn metrics.

International Expansion:
- International sales increased by 16%, despite a slight slowdown from the previous quarter's growth rate, which was positively impacted by a duty reclassification.
- Growth was driven by strong performance in Mexico, Europe, and the Middle East, with both new and returning customers contributing to traffic and conversion.
- FIGS plans to enter Japan and South Korea later this year, expanding its presence beyond the U.S.

Cost and Margin Pressure:
- Gross margin contracted by 130 basis points to 67.6%, reflecting higher promotional performance and the impact of freight expenses due to shipping issues.
- Increased selling expenses, partly due to the new fulfillment center, also impacted profitability.
- FIGS is focused on optimizing supply chain costs and leveraging technology for efficiency, while maintaining its strategy to invest in growth areas like international and B2B.

Tariff Challenges and Mitigation Strategies:
- The company is facing challenges from new tariffs, which are expected to increase costs for its products by 150 to 100 basis points, depending on the degree of mitigation.
- Mitigation efforts include optimizing supply chain costs, pursuing supplier negotiations, and working to scale the new fulfillment center.
- Figures is committed to staying on offense with strategic investments and using its strong financial position to drive growth amid market uncertainties.