Founded in 2013, FIGS (NYSE:FIGS) aims "to celebrate, empower and serve current and future
generations of healthcare professionals." Operating through a direct-to-consumer business model, FIGS brings personalization and a true sense of community to a market that was previously seen as a basic commodity. Led by co-founders and co-CEOs Heather Hasson and Trina Spear, the company has rapidly grown to 1.6 million customers and reported its first-ever quarter of over $100 million in revenue.

FIGS is quickly carving out a highly profitable niche in the healthcare apparel space thanks to its focus on personalization and innovation. This focus has built a loyal following and solid community of "Awesome Humans," as the company calls its customers, and gives investors an intriguing niche investment opportunity.

Beloved products

Sporting a Net Promoter Score (NPS) of +81 as of March 2021, FIGS and its products enjoy an astonishing amount of customer love, quite frankly. Ranging from -100 to +100, NPS is a numerical representation of how likely a customer would be to recommend a product or company to a friend or colleague. With its score of +81, FIGS essentially has nine promoters of its products out of every ten customers. 

Thanks to both the free word-of-mouth advertising this customer appreciation generates for the company and its powerful direct-to-consumer selling strategy, FIGS boasts impressive gross profit margins despite having just recently gone public in June of this year. As Spear explained during the company's first-ever quarterly earnings call, "Unlike other healthcare apparel companies, we don't have to pay fees to license our brand from someone else, and we don't have to give away a share of our revenue to third-party retailers. As a result, we have a structurally advantaged gross margin, which reached 73.3% in Q2." Should FIGS be able to maintain these 70%-plus gross profit margins, as management believes it will, the company will have a solid foundation for future profitability. 

Five medical professionals wearing various types of FIGS scrubs.

Image source: FIGS.

Leadership position, small market share

While FIGS has quickly become the de facto leader in the personalized healthcare apparel industry, it still is in the very early stages of building out its overall market share. So in a sense, this is a little bit of the best of both worlds for investors, as the company is demonstrating undeniable brand power yet needs more time to address its entire market. Despite the $100 million in sales during its most recent quarter, Spear believes the company still has only a 3% US market share.

Furthermore, Spear believes the global target addressable market for healthcare apparel will be $86 billion by 2025, and she emphasized that FIGS will need to become a truly global brand to reach full success. The company is currently operating in Canada, Australia, and the UK, but international sales accounted for just 7.9% of the company's revenue as of the second quarter. While the remaining international growth runway is simply massive, management is taking a measured, country-by-country approach to expansion. By doing so, FIGS aims to emphasize personalization and customization globally, leaning upon brand ambassadors in each country to help spread familiarity with the company's products.

Personalizing portfolios

Overall, I believe FIGS offers investors a truly unique thesis for adding some growth to their portfolios, thanks to its strategy of personalization and building a lifestyle brand inside a somewhat forgotten industry. Reinventing and personalizing basic consumer goods has led to many wildly successful companies, from Starbucks to Lululemon Athletica and even Etsy, and I believe FIGS is beautifully positioned to continue this tradition.

I will be watching for updated guidance regarding the company's overall market share in the United States as it continues to increase its 1.6 million customer count. Additionally, it will be important to watch for which additional countries FIGS might decide to expand into over the coming quarters, if any, and determine if expansion has any impact on the company's pristine margins.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.