FIGS (NYSE: FIGS), the direct-to-consumer healthcare apparel and lifestyle brand, stock rose 3.02% (As on ctober 17, 11:43:41 AM UTC-4, Source: Google Finance) even after the company  was downgraded by stock analysts at Barclays from an “overweight” rating to an “equal weight” rating. They currently have a $9.00 price objective on the stock, down from their prior price objective of $15.00. “Despite our longer-term view of the growth potential for FIGS as a premium healthcare apparel brand, the current weakening demand backdrop, increasing acquisition costs, and potential for slowing top-line growth cause us to move to Equal Weight,” Equity Analyst Adrienne Yih told clients. She added that risks to margins and sales are becoming more evident as the cost of acquiring customers grows more onerous. Further, inflationary pressures on consumer wallets appear to be abating demand, with increased promotional activity seen as a signal of this effect. “We are downgrading FIGS shares to Equal Weight and moving to the sidelines until there is greater clarity on the macroeconomic environment, the company‘s ability to move through excess inventory, and the direction of customer acquisition spend,” Yih concluded.

Meanwhile, the company is maintaining net revenues outlook in the range of $510 to $530 million, representing year over year growth of approximately 22% to 26% and maintaining Adjusted EBITDA margin outlook in the range of 16% to 18%. Active customers as of June 30, 2022 increased 26.2% to 2.0 million. Net revenues per active customer was $227, an increase of 3.7% year over year. Average Order Value (“AOV”) was $109, an increase of 5.8% year over year primarily driven by higher units per transaction and average unit retail.

Moreover, Net revenues were $122.2 million, an increase of 20.9% year over year, driven by an increase in orders as a result of strong retention of existing customers and new customer acquisition and, to a lesser extent, an increase in AOV. Gross margin was 70.6%, a decrease of 270 basis points year over year, driven by increased ocean and air freight rates, an increase in freight-in driven by higher utilization of more expensive air freight, and product mix shift. Net income, as adjusted was $6.3 million and diluted earnings per share, as adjusted was $0.03. Adjusted EBITDA was $21.5 million, a decrease of $5.3 million year over year. Adjusted EBITDA margin was 17.6%, a decrease of 890 basis points year over year.