Shares of medical scrubs and accessories company Figs Inc. (FIGS) sank 23% in Friday premarket trading after it reported first-quarter results that missed expectations and lowered its guidance. Net income totaled $8.9 million, or 5 cents per share, down from $11.4 million, or 7 cents per share, last year. Revenue of $110.1 million was up from $87.1 million. The FactSet consensus was for EPS of 6 cents and revenue of $117.3 million. For 2022, Figs is now guiding for revenue in the range of $510 to $530 million, down from $550 to $560 million. The FactSet consensus is for revenue of $534.8 million. Figs attributed the downward guidance revision to supply chain challenges, inflation and shifting consumer spending patterns. "[S]ince early March, we've seen an intense and persistent surge in the volatility of ocean transit times for receiving our products, largely due to vessels being unexpectedly rerouted by carriers while in transit," said co-Chief Executive Trina Spear on the late Thursday earnings call, according to FactSet. "[W]ithout predictability, we are less able to mitigate these issues with longer lead times alone. This has impacted our ability to keep core products in stock and execute our color and product drops that fuel our growth." The company will use air freight to get around these issues, however the move will put pressure on margins. "Supply chain chaos led to significant disruption in product flows, and shifting of the launch calendar," wrote Cowen analysts in a note. "Our concerns are on the premium valuation and lofty consensus estimates." Cowen rates Figs market perform and slashed its price target to $11 from $24. Figs stock has slumped 53.4% for the year to date through Thursday.
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