Figs (FIGS -2.19%) is on a mission to revolutionize the world of healthcare apparel. In this segment of Backstage Pass, recorded on Jan. 10, Fool.com contributors Danny Vena, Jamie Louko, and Rachel Warren discuss the market opportunity for Figs and its business potential.
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Danny Vena: One of the things that I really like about scrubs is the fact that I was already pretty well sold on the company. But many of you know, Matt Frankel, who was actually on the hour before us. Matt's wife works in the healthcare industry and is sold on the product. All of the people that she knows that use it are sold on the product. That's anecdotal data. But any time you see a company coming in and disrupting the established players by building a better mouse trap.
Or in this case, creating more comfortable and better looking scrubs. I think there's potential here for extraordinary growth. Now, right now the stock is down about 20% from its IPO price, which is not surprising to me. I generally don't buy for at least a couple of quarters after a company goes public, I made an exception here in the case of Figs and my position is down a little bit. But again, I think this is a company that has a good future and one that investors should definitely keep an eye on. Any questions, guys?
Jamie Louko: Yes, I got one for you, Danny. First, you can make that sample size two, because my girlfriend works at a dentist office and she loves them. She can't stop talking about them and all of her coworkers all wear them, and they all love them. That's just a little bit more anecdotal evidence. My question is, go ahead.
Danny Vena: No, go ahead.
Jamie Louko: My question is, they talk a lot about two growth opportunities. The first being international expansion. Almost all of their revenue comes from the U.S.
Their are other growth avenue, which is more of a pie-in-the-sky idea right now, but it's going into other professions. Namely being like chef and the cooking industry, the restaurant industry, things like that. Where do you see the Figs' growth coming from in the next 3-5 years?
Danny Vena: Primarily, I think the biggest opportunity right now is in the healthcare industry. That's where their primary focus has been. That's where they get a lot of word-of-mouth. That's where a lot of their customers are. It's almost like a cult-like following for the people that use their scrubs. I don't mean that in a derogatory way.
It's just they are really sold on the product, they're really advocates for the product. I think that gives them momentum in the industry. I think they could expand beyond that and get traction beyond that, but my investing thesis is based on their ability to expand in the healthcare field, and anything else beyond that is gravy in my book.
Rachel Warren: Yeah. I just want to say, I have a little bit of an anecdotal follow-up too. I've been aware of this company for a little bit because Shopify will regularly do this like interviews with various thought leaders, and I had some ads come through like my YouTube and they were talking with one of the founders of Figs, and that's how I started to learn about this company a little bit.
It's interesting because I do think people underestimate how strong the demand is for really high-quality, comfortable scrubs. My brother recently started working in the healthcare space as well, and I was surprised how difficult it was to sometimes find scrubs that you like and you actually want to wear day-after-day.
I loved that this company fills a very constant need where demand is not abating at all, and I also love that it's founder-led and female-owned as well, so definitely going to be watching it.
Danny Vena: Very cool indeed. We're about three-fifths of the way through the companies we're going to present. I have one comment here that I'm going to read out of Slido.
ProShopGuy said, "Figs is a company that grew its market share using Shopify as its platform to become a public company, along Shopify as a company supporting entrepreneurs."
That's something Motley Fool Co-Founder David Gardner called keiretsu, which was companies that have a connection to another company and helping them both to succeed. I think we're seeing a little bit of that there with FIGS and its connection to Shopify.
