Shares of Figs Inc. hovered around $7 last month, a 70% drop from November 2021. The tepid third-quarter earnings report didn’t help, leading the health-care clothing brand based in Santa Monica to revise its 2022 revenue guidance to $495 million. , down from a range of $510 million to $530 million.
Chief executive Catherine Spear said “the sustained level of inflation (has) started to weigh more” on Figs customers, who, according to surveys, still love the brand but are “pulling back purchases due to their lower budgets.” tight”.
Company management, discussing gross margin declines, cited rising freight costs, a greater mix of promotions, and recent product launches that “didn’t generate the same sales growth we’ve typically seen in the past.” during a call with analysts on November 10.
While Wall Street remained undecided on Figs’ share value, the company scored a major victory last month.
His long-running legal battle with a Chatsworth-based competitor came to an end on November 4, when a US District Court jury contacted, “which would have been a violation of the Lanham Act.
Strategic Partners Inc., which changed its name to Careismatic Brands Inc., filed the lawsuit in 2019, seeking more than $120 million in lost profits and punitive damages. He also raised an issue with Figs’ claims that its “workwear reduces hospital infection rates by 66%” and that the company “donates one set of workwear for every set sold.” The jury, after a day-long deliberation, also dismissed those claims, according to court documents.
“SPI has spent the last four years spreading lies and falsehoods about our company and about me personally, (and) my co-founder, Heather Hasson,” Spear told analysts. “We’ve really done a good job putting our blinders on and just focusing on growing our business, focusing on serving our community. But I’m very proud to say that after four years, it’s a deep feeling to finally have our day in court… where the truth finally came out. And after three weeks of trial, the jury found unanimously in our favor on every issue. They found out that we did nothing wrong.”
In addition to “putting on his blinders” and focusing on growing his business, Figs created a website—facts-and-figs.com—in which he refuted SPI’s claims. He posted screenshots of emails sent by former Careismatic Brands CEO Mike Singer asking his team for a strategy to “attack” Figs.
“The normal approach that companies often take is to ‘don’t comment’ on everything related to litigation, but we really wanted to make sure that we were transparent with our investors and with the world about what this case was about and what was really going on. on … rather than let SPI’s unfair attacks determine the narrative,” said Todd Maron, Figs’ chief legal officer, who before joining Figs in 2021, held a similar role at Tesla Inc.
Spear co-founded Figs with Hasson in 2013. The digital-native brand sells 98% of its products through its website and mobile app. Their scrubs are made with proprietary fabric technology, called FIONx, which offers four-way stretch and moisture-wicking properties. Figs has around 270 employees and outsources its garment manufacturing operations to factories in Southeast Asia, China and South America.
Careismatic Brands, founded in 1995, manufactures healthcare apparel and school uniforms through various brands, including Cherokee Uniforms and Dickies Medical, which are sold through distributors to customers in more than 70 countries. Partners Group Holding, a Swiss-based private equity firm with $127 billion in assets under management, acquired the company last year in a deal valued at $1.3 billion.
“Careismatic Brands takes our position as a leader in the medical apparel industry seriously and brought this case to protect healthcare workers, force Figs to stop making false claims, and ensure a fair and transparent marketplace,” said the director. Careismatic Brands executive Girisha Chandraraj. she said in a statement.
Figs gets about 10% of the North American healthcare apparel market, while Careismatic’s share is around 30%, according to Figs’ Maron. He added that Careismatic in 2016 sued another of its competitors, Vestagen Protective Technologies Inc., accusing it of false advertising related to the performance of its scrubs. He also prevailed in a $5.3 million trademark infringement case against Koi Design, a Santa Monica-based smock manufacturer that ended up filing for bankruptcy in 2019.
“I just think it’s the price of success,” Maron said. “When you are successful, innovative and disruptive, people will try to bring you down… My recommendation to other companies in the same situation is to fight back and defend yourself, and let the truth prevail rather than be intimidated by these types of attacks. ”
He added that Carismatic would likely appeal the ruling. “I’m sure they’ll continue to do what they’ve done for the last four years, which is try to intimidate us and try to litigate us to death,” Maron said. “We’re just going to keep the same approach we’ve had for the last four years and keep fighting.”