Figs holder Applied Fundamental asks for capital allocation strategy

Applied Fundamental Research, a shareholder of Figs (FIGS), said it submitted an open letter to the company’s management and board. The letter reads in part: “We strongly support the Board and management team in rejecting any acquisition offers that do not fully reflect the company’s current and potential value. FIGS’ exceptional brand equity, pristine balance sheet, and multiple growth vectors within the expansive global marketplace for healthcare apparel leaves the company well positioned for sustained growth and long-term value creation..We believe the disconnect between FIGS’ tremendous potential and the market’s perception of value can be attributed, in large part, to the absence of a clearly articulated capital allocation strategy. Addressing this gap presents a powerful opportunity to unlock shareholder value. To achieve this, we encourage the company to: Clearly define the capital requirements for key growth initiatives, including the B2B Teams business, international expansion, brick-and-mortar stores, and distribution infrastructure; Articulate the priorities and pace of these investments, while also highlighting the company’s strategy for funding continued innovation; Define the scope of excess cash on the balance sheet and execute opportunistically against current and future share repurchase authorizations to take advantage of the market’s misperception of value while demonstrating confidence in FIGS’ trajectory.”