Financial Strategy
FIGS earns 67 cents gross per dollar and keeps almost none
FIGS reported a 66.5% gross margin in FY2025 but only a 6.0% operating margin, and just 0.4% in FY2024. The gap is the three operating-expense lines below gross profit: Selling, Marketing, and General and administrative, which together consumed 60.5% to 69.2% of revenue across FY2021 to FY2025 per its 10-K filings (the 69.2% high is an IPO-year figure inflated by one-time stock grants; the recurring range is 60.5% to 67.2%).
Key Takeaways
- FIGS ran a 66.5% gross margin in FY2025 but only a 6.0% operating margin, and just 0.4% in FY2024. Gross margin is where the story starts, not where it ends. Source: FIGS FY2025 Form 10-K, SEC EDGAR.
- Three operating-expense lines below gross profit (Selling, Marketing, and General and administrative) consumed 60.5% to 69.2% of revenue every year from FY2021 to FY2025 (FY2021's high reflects one-time IPO stock grants; the recurring range is 60.5% to 67.2%). A 67% gross margin business that runs 67% operating expense earns almost nothing.
- Selling expense (fulfillment, shipping, merchant fees) rose from 19.5% of revenue in FY2021 to 23.1% in FY2025, the sharpest structural increase of any line. That is the recurring cost of running a direct-to-consumer shipping model.
- FY2024 was the stress test: operating margin fell to 0.4% on $555.6M of revenue, because operating expenses climbed while revenue grew just 1.8%. Operating income was $2.3M on more than half a billion dollars of sales.
- FY2025 was the recovery: 13.6% revenue growth against 2.2% expense growth pushed operating margin back to 6.0%. That swing is a near-fixed cost base working against the margin and then for it, on the exact same expense structure.
Every founder who sees a 67% gross margin assumes the business behind it prints money. FIGS, the healthcare-apparel brand that sells scrubs direct to nurses and doctors, reported a 66.5% gross margin in fiscal 2025. It also reported a 6.0% operating margin. The year before, on almost identical gross margin, operating margin was 0.4%. The gross margin headline is the beginning of the conversation, not the answer, and FIGS is one of the clearest public examples of why. This piece walks the income statement line by line, using the numbers straight out of the company's 10-K filings with the U.S. Securities and Exchange Commission (SEC).
The gross margin headline and why it misleads
FIGS makes scrubs, and it makes them at an apparel gross margin most brands would trade a limb for. In FY2025 the company reported $631.1M of net revenue, $211.3M of cost of goods sold, and $419.8M of gross profit, a 66.5% gross margin. Over the five years from FY2021 to FY2025 that gross margin has run between 66.5% and 71.8%. On its own, that number says premium pricing, a differentiated product, and real brand power. All true.
But an income statement does not stop at gross profit. Below that line, FIGS reports three separate operating-expense buckets: Selling, Marketing, and General and administrative. Most companies lump these into a single "SG&A" line, so you never see the split. FIGS breaks them out, which is a gift for anyone trying to understand where a direct-to-consumer (DTC) dollar actually goes. When you add those three lines together, they consumed between 60.5% and 69.2% of revenue in every one of the last five years.
Sit with that for a second. A business earning 67 cents of gross profit on the dollar, spending 60 to 69 cents of that same dollar to run itself. The difference between the two is the operating margin, and it has been as low as 0.4%. When I talk to founders sitting on a fat gross margin, the pattern is almost always the same: they have fallen in love with the top of the P&L and have never modeled the three lines below it. FIGS shows what those lines can do.
The five-year data: gross margin one way, expenses not far behind
The table below is the whole argument in one place. Every figure comes from the FIGS consolidated statements of operations, expressed as a percentage of net revenue.
| Fiscal year | Revenue ($M) | Gross margin | Selling | Marketing | G&A | Total op. exp. | Operating margin |
|---|---|---|---|---|---|---|---|
| FY2021 | 419.6 | 71.8% | 19.5% | 14.0% | 35.7% | 69.2% | 2.6% |
| FY2022 | 505.8 | 70.1% | 23.4% | 15.4% | 23.9% | 62.6% | 7.4% |
| FY2023 | 545.6 | 69.1% | 22.9% | 14.1% | 25.8% | 62.8% | 6.2% |
| FY2024 | 555.6 | 67.6% | 25.5% | 15.9% | 25.7% | 67.2% | 0.4% |
| FY2025 | 631.1 | 66.5% | 23.1% | 14.8% | 22.6% | 60.5% | 6.0% |
Two things jump out. First, gross margin has compressed steadily, from 71.8% in FY2021 to 66.5% in FY2025, a decline of about 530 basis points. In the FY2025 filing, FIGS attributes the most recent drop largely to tariffs, which it says cut gross margin by roughly 120 basis points, plus inventory write-offs. Second, and more importantly, operating margin has whipped around far more violently than gross margin: 2.6%, then 7.4%, then 6.2%, then a collapse to 0.4%, then back to 6.0%. Gross margin moved in a narrow band. Operating margin swung by seven points. That volatility is not random. It tracks how well the company controlled the three expense lines in each year.
Returns are quietly eating your margin. See by how much.
Get our Real Cost of Returns calculator: plug in your numbers, see the true hit per return.
Check your inbox. We'll send the Real Cost of Returns calculator shortly.
What each expense line actually buys
The three lines are not interchangeable, and understanding what each one pays for is how you read any DTC P&L, including your own.
Selling is the cost of the model. It covers fulfillment, warehousing, outbound shipping, and merchant-processing fees. This is the price of putting a box of scrubs on a doorstep. It rose from 19.5% of revenue in FY2021 to 23.1% in FY2025, and hit 25.5% in FY2024. That is the sharpest structural climb of any line, and it is the one founders underestimate most. When we work through a P&L with an operator running a shipping-heavy brand, the line that surprises them is never marketing. It is this one, because it scales almost dollar-for-dollar with orders and it does not get cheaper as you grow.
Marketing is the cost of demand: paid social, brand campaigns, and ambassadors. It is the most stable line, holding between 14% and 16% of revenue for five straight years ($93.1M in FY2025). Notice that it is not the biggest bucket. Both Selling and G&A are larger. FIGS has chosen to hold marketing flat as a percentage of revenue rather than pour fuel on growth, and that discipline is a big part of why it stays profitable.
General and administrative is overhead: headcount, software, and stock-based compensation. FY2021 is the outlier at 35.7%, inflated by IPO-year stock grants. Strip that and G&A has run in a 22.6% to 25.8% band since. Stock-based compensation alone was $26.9M in FY2025, down from $42.7M in FY2024, per the FY2025 filing. Worth noting: FIGS reported 388 employees at the end of 2025 generating $631.1M of revenue, about $1.63M per head. That is a lean team for a consumer brand, and it is where a flat cost base eventually turns into profit as revenue grows.
The FY2024 stress test: all three lines move at once
FY2024 is the year to study, because it shows what happens when the machine slips. Revenue grew just 1.8%, to $555.6M. Gross margin was a healthy 67.6%. And yet operating income was $2.3M. Operating margin: 0.4%. On more than half a billion dollars of sales, FIGS kept about two cents on every ten dollars.
Here is why. Total operating expense hit 67.2% of revenue, essentially touching the 67.6% gross margin. Every one of the three lines was heavy: Selling at 25.5% (a fulfillment-center transition added cost), Marketing at 15.9% (its peak, coinciding with a large brand-campaign year), and G&A at 25.7%. When revenue barely grows and all three expense lines sit near their highs at the same time, the gap between gross margin and total expense closes to almost nothing. That gap is the operating margin. This is the mechanism, laid bare.
| Metric (FY2024) | Value |
|---|---|
| Net revenue | $555.6M |
| Revenue growth YoY | 1.8% |
| Gross margin | 67.6% |
| Total operating expense (% of revenue) | 67.2% |
| Operating income | $2.3M |
| Operating margin | 0.4% |
The lesson for operators is uncomfortable. A 67.6% gross margin did not protect FIGS in a flat-growth year, because the cost of running a DTC brand is close to fixed in the short run. When I talk to founders whose revenue has stalled, the instinct is to point at the gross margin and say the unit economics are fine. FIGS is the counterexample: the unit economics were fine, and the company still earned almost nothing, because the cost base did not shrink when growth did.
The operating margin lesson: what it takes to move the number
FY2025 is the same mechanism running the other way, and it is the more hopeful story. Revenue grew 13.6%, to $631.1M, an extra $75.5M. Total operating expense grew only 2.2%. When the top line grows six times faster than the cost base, the gap between them widens fast, and that is exactly what happened: operating income went from $2.3M to $38.1M, and operating margin recovered from 0.4% to 6.0% on the same three-line cost structure.
That is what a near-fixed cost base does. The heavy expense structure that punished FIGS in the flat year became its friend in the growth year, because most of the incremental revenue dropped straight through to operating income. This is the thing operators miss when they see a high gross margin and assume the business is capital-efficient. A brand with 60% operating expense is not efficient or inefficient by default. It is a coiled spring: it destroys margin when growth stalls and multiplies it when growth returns.
A 67% gross margin tells you the product is priced well. It tells you nothing about whether the business is profitable. The three lines below gross profit decide that, and at FIGS those three lines were the difference between a 0.4% operating margin and a 6.0% one, on nearly identical revenue and identical gross margin, one year apart.
What to benchmark against when you build your own DTC P&L
The practical takeaway is to read every line below gross profit before you draw a conclusion about what a business "should" earn. If you are modeling your own brand, three benchmarks help.
The strongest public benchmark, Lululemon, runs total operating expense near 35% of revenue and posts operating margin north of 20%, a gap we walk through in our Lululemon teardown. That is the ceiling, and it is reached with wholesale scale and multi-category breadth that a young DTC brand does not have. Most pure-DTC brands sit far closer to FIGS, carrying 55% to 70% operating expense because they pay the full cost of shipping and acquiring every single customer. FIGS at 60.5% in its best recent year is high, but it is the rare DTC-primary apparel brand actually earning a positive operating margin at all. Plenty of well-known peers in this category run negative operating margins on a similar or heavier expense load.
The pattern we see again and again with founders at $10M to $100M is that the gross margin line gets all the attention in the board deck and the three expense lines get a single summarized row. Flip that. Model Selling, Marketing, and G&A as separate lines, project each as a percentage of revenue, and watch what happens to operating margin when you assume a flat-growth year. If the answer looks like FIGS in FY2024, you have a business that only works while it is growing. That is a fine business, as long as you know that is what you own.
Related reading. For where FIGS sits against its peers, see the 9-company apparel operating-margin benchmarks. For how we work the operating line with brands, see our fractional CFO work.
Sources and methodology
Primary source: FIGS, Inc. SEC 10-K filings. All FIGS financial figures come directly from the consolidated statements of operations in the company's annual reports filed with the SEC. The FY2025 filing supplies FY2025, FY2024, and FY2023; the FY2022 filing supplies FY2022 and FY2021. Line items used: Net revenues, Cost of goods sold, Gross profit, Selling, Marketing, General and administrative, Total operating expenses, and Net income from operations. FY2025 filing: figs-20251231.htm. FY2022 filing: figs-20221231.htm.
Structured financial spine cross-check. Revenue, gross profit, operating income, and net income were cross-checked against the SEC EDGAR structured company-facts data for FIGS (CIK 0001846576) to confirm every percentage in the tables. The EDGAR filing index for FIGS lists every annual report referenced here.
Percentage math. Every margin figure is line item divided by net revenue for the same fiscal year, matching the "as a percentage of net revenues" columns FIGS publishes in its Management's Discussion and Analysis. Gross margin minus total operating expense as a percent of revenue equals operating margin for all five years, within rounding.
Data visualization. This edition ships with two inline data tables covering the full five-year P&L waterfall and the FY2024 stress-test detail. Every figure is present in those tables, sourced directly to the SEC filings.
Peer benchmark context. The apparel and DTC operating-expense ranges cited in the final section are drawn from public 10-K filings of scaled and DTC-primary apparel companies. They are used as directional context, not as exact matched comparisons, because fiscal-year ends and channel mixes differ across the group.
Frequently asked questions
what is figs gross margin and why is their operating margin so much lower?
FIGS reported a 66.5% gross margin in FY2025 but only a 6.0% operating margin. The gap is three operating-expense lines the company reports below gross profit: Selling, Marketing, and General and administrative. Together they took 60.5% of revenue in FY2025, which is what turns 66.5 cents of gross profit into 6 cents of operating profit.
what percentage of revenue does figs spend on marketing?
Marketing has held at roughly 14% to 16% of net revenue every year from FY2021 to FY2025. In FY2025 it was 14.8%, or $93.1M. It is not even the largest of the three expense lines. Selling and General and administrative are each bigger.
why did figs operating margin drop to almost zero in 2024?
In FY2024 revenue grew only 1.8% while total operating expense stayed at 67.2% of revenue, just below the 67.6% gross margin. Operating income was $2.3M on $555.6M of revenue, a 0.4% operating margin. When revenue is flat and the cost base is that heavy, there is almost nothing left.
is a 67% gross margin good for a dtc brand?
It looks excellent on its own, and it is above most apparel. But gross margin only tells you the spread between price and product cost. It says nothing about the fulfillment, marketing, and overhead you spend to sell the product. FIGS proves a 67% gross margin can still leave you with a 0.4% operating margin in a bad year.
what is a healthy sg&a ratio for a dtc apparel company?
There is no single number, but the strongest public benchmark, Lululemon, runs total operating expense near 35% of revenue. Most direct-to-consumer brands run far higher because they carry the full cost of shipping and acquiring every customer. FIGS at 60.5% in its best recent year is high but still profitable, which is rarer than it sounds.
how do you calculate the gap between gross margin and operating margin?
Take gross margin as a percent of revenue, then subtract every operating-expense line as a percent of revenue. For FIGS in FY2025 that is 66.5% gross margin minus 60.5% total operating expense, which equals a 6.0% operating margin. The subtraction is the whole game.
does figs actually make money?
Yes. FIGS reported $34.3M of net income in FY2025 on $631.1M of revenue, a 5.4% net margin, and it generated $61.2M of operating cash flow. It is one of the few pure direct-to-consumer apparel brands running a positive operating margin at all.
what is the difference between selling expense and marketing expense on a dtc income statement?
Selling expense is the cost of fulfilling and delivering orders: warehousing, shipping, and payment-processing fees. Marketing expense is the cost of creating demand: paid ads, brand campaigns, and ambassadors. FIGS reports them separately, which is unusually clear and lets you see that logistics, not ads, is its fastest-growing cost line.