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IPO Report: Figs will focus on medical scrubs now, but could set its sights on other industry uniforms in the future

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Medical scrubs and other medical apparel and accessories may sound like a niche category, but newly public Figs Inc. says it has a lot more market share to gain.

Figs
FIGS,
+3.06%

quotes Frost & Sullivan data in its initial public offering documents that put the total addressable market for the global healthcare apparel industry in 2020 at $79 billion. In the U.S., the total addressable market was about $12 billion last year.

Figs net revenue in 2020 was $263.1 million, and active customers jumped to 1.3 million from 600,000 the previous year.

See: Figs IPO: 5 things to know about the newly public healthcare apparel company

Figs has a market share of just 2.1%.

The company began trading on Thursday, and jumped nearly 30% from the $22 IPO price right out of the gate. Shares closed the day at $30.02.

Shares were up slightly, 0.4%, in early Friday trading.

“We feel like we’ve barely scratched the surface on continuing to grow share,” said Trina Spear, co-founder and co-chief executive of the company. Spear spoke with MarketWatch shortly after the stock began trading.

“For the next five years, the medium term, we’re very much focused on healthcare community.”

Other industry possibilities include food service, hospitality or construction.

“All of them are relatively broken,” Spear said.

Figs, a digital-native business, is rooted in a core group of 13 scrubwear styles that continue to sell even as limited-edition items and colors launch. Limited-edition merchandise is launched on a near-weekly basis.

Read: Moderna and Pfizer are already developing COVID-19 vaccine boosters. Do we need a third shot?

The founders — Heather Hasson is the other co-founder and co-CEO — say there’s “little-to-no inventory risk,” no long lead times on their merchandise, and no need for markdowns or promotions.

And because customers wear Figs uniforms on a daily basis, there’s a constant need for replenishment.

This past pandemic year was “profound” for healthcare professionals, according to Spear. One shift that could impact Figs business is a change in the dress code for physicians, who typically wore business casual attire pre-COVID.

“No more chinos,” said Spear. “We saw hospitals encouraging or mandating that anyone entering hospitals wear scrubs. We saw physicians in scrubs.”

Even if everyone is in scrubs, they “want to look modern and professional,” she said.

The Renaissance IPO ETF
IPO,
+0.80%

has fallen 3.8% for the year to date while the S&P 500 index
SPX,
+0.29%

is up 12.1% for the period.

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