DBG Provides Shareholder Update
Rhea-AI Summary
Digital Brands Group (NASDAQ: DBGI) reports significant financial improvements, including the elimination of $5.2 million in convertible notes and debt. Interest expense is expected to decrease from $3.1 million in 2024 to $420,000 in 2025, resulting in a $2.7 million benefit to net income and cash flow. The company reduced G&A expenses by $500,000 in Q3 2024 compared to Q2.
Key initiatives include a 20% increase in Sundry wholesale prices, partnership with VaynerCommerce leading to 224% increase in daily digital revenues, and collaboration with LTK platform. Future plans include launching Avo on TikTok Shop in January 2025, introducing Sundry online exclusives, and implementing influencer partnerships and direct mail programs throughout 2025.
Positive
- Elimination of $5.2 million in convertible notes and aged accounts payable
- Expected reduction in interest expense from $3.1M to $420K annually
- $500,000 reduction in G&A expenses (Q3 vs Q2 2024)
- 224% increase in daily digital revenues through VaynerCommerce partnership
- 20% increase in Sundry wholesale prices, expected to add $500,000 in gross margin for 2025
Negative
- Accumulated $42.3M in net income expenses and shareholder equity losses over past three years
- Expected $2.5M in remaining expenses over next two years from previous acquisitions
News Market Reaction 1 Alert
On the day this news was published, DBGI gained 7.32%, reflecting a notable positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Improvement in Financial Condition Allows Focus on Revenue Growth
Austin, TX, Dec. 16, 2024 (GLOBE NEWSWIRE) -- Digital Brands Group, Inc. (“DBG”) (NASDAQ: DBGI), a curated collection of luxury lifestyle brands, is pleased to provide an update to its shareholders regarding recent activities and future initiatives for growth as detailed below.
Benefits to Net Income and Shareholder Equity
The Company has made notable progress since May of 2024 in improving its financial condition, including through the elimination of
Due to the elimination of interest expense from the above, we believe the Company’s interest expense will decline by approximately
Most importantly, the company has come to a transition point regarding the elimination of the overhang in our shareholder equity associated with our prior acquisitions, as shown in the table below. The Company has experienced an estimated negative
We believe these expenses over the next two years will only be
| 2022 | 2023 | 2024 Est | 2025 Est | 2026 Est | ||||||||||||||||
| Interest expense | 8.5 | 5.1 | 3.1 | 0.4 | 0.4 | |||||||||||||||
| Goodwill amortization | 2.2 | 2.0 | 2.4 | 1.7 | - | |||||||||||||||
| Goodwill write-downs | 15.5 | - | 2.0 | - | - | |||||||||||||||
| Loss on disposition of business | - | 1.5 | - | - | - | |||||||||||||||
| Total | $ | 26.2 | $ | 8.6 | $ | 7.5 | $ | 2.1 | $ | 0.4 | ||||||||||
Additional Benefits to Net Income
In addition to the interest expense and goodwill amortization and write-downs noted above, the Company also reduced its general and administrative expenses by approximately
The Company aims to continue to achieve additional savings in general and administrative expense associated with reductions in workforce, severance payments ending at year end, reduction of stock option expenses, and lower consulting and legal fees.
Marketing Growth Initiatives
Due to the reduction in debt, aged accounts payable and interest expense noted above, the Company is focusing on investing in growth marketing initiatives, including recent announcements highlighting the Company’s digital marketing results.
Due to the recent success of these results as previously disclosed, we have developed the additional growth initiative targets listed below.
October 2024
We increased wholesale prices by
November 2024
Partnered with VaynerCommerce, a leading digital agency, which led to a
Partnered with LTK, a large influencer platform, which resulted in the recent launch of influencer videos for each our brands. Our products that were featured all sold out. We now have over 200 influencer requests per brand on the LTK platform.
December 2024
Announced launch of our brand Avo on TikTok Shop and TikTok Live starting in January 2025, featuring Tik Tok influencers and limited-edition product.
February 2025
We plan to launch Sundry product online only exclusives with direct-to-consumer pricing, which is expected to create an attractive product price point. This initiative is driven by Sundry’s high online engagement and click through rates, which we believe will result in even higher conversion rates at lower price points.
March 2025
We plan to launch Sundry on TikTok Shop and TikTok Live.
Spring/Summer 2025
We plan to partner with two to three major influencers or celebrities for each brand with the assistance of VaynerCommerce.
Summer/Fall 2025
We plan to implement a direct mail program with the assistance of VaynerCommerce.
Closing
“We have made significant progress in cleaning up our balance sheet, which should result in significantly lower interest expense and increased cash flow. Additionally, the Company has worked through over
Forward-looking Statements
Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting DBG and therefore involve several risks and uncertainties. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may” and other words and terms of similar meaning or use of future dates, however, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding DBG’s plans, objectives, projections and expectations relating to DBG’s operations or financial performance, and assumptions related thereto are forward-looking statements. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. DBG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Potential risks and uncertainties that could cause the actual results of operations or financial condition of DBG to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic; the level of consumer demand for apparel and accessories; disruption to DBGs distribution system; the financial strength of DBG’s customers; fluctuations in the price, availability and quality of raw materials and contracted products; disruption and volatility in the global capital and credit markets; DBG’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; intense competition from online retailers; manufacturing and product innovation; increasing pressure on margins; DBG’s ability to implement its business strategy; DBG’s ability to grow its wholesale and direct-to-consumer businesses; retail industry changes and challenges; DBG’s and its vendors’ ability to maintain the strength and security of information technology systems; the risk that DBG’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss; DBG’s ability to properly collect, use, manage and secure consumer and employee data; stability of DBG’s manufacturing facilities and foreign suppliers; continued use by DBG’s suppliers of ethical business practices; DBG’s ability to accurately forecast demand for products; continuity of members of DBG’s management; DBG’s ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment; DBG’s ability to execute and integrate acquisitions; changes in tax laws and liabilities; legal, regulatory, political and economic risks; adverse or unexpected weather conditions; DBG's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent DBG from fulfilling its financial obligations; and climate change and increased focus on sustainability issues. More information on potential factors that could affect DBG’s financial results is included from time to time in DBG’s public reports filed with the SEC, including DBG’s Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished with the SEC.
About Digital Brands Group
We offer a wide variety of apparel through numerous brands on a both direct-to-consumer and wholesale basis. We have created a business model derived from our founding as a digitally native-first vertical brand. We focus on owning the customer's "closet share" by leveraging their data and purchase history to create personalized targeted content and looks for that specific customer cohort.
Digital Brands Group, Inc. Company Contact
Hil Davis, CEO
Email: invest@digitalbrandsgroup.co
Phone: (800) 593-1047
SOURCE Digital Brands Group, Inc.
Related Links
https://ir.digitalbrandsgroup.co
FAQ
How much will DBGI reduce its interest expense in 2025?
What impact did VaynerCommerce partnership have on DBGI's digital revenues?
How much debt did DBGI eliminate in 2024?
What is DBGI's wholesale price increase for Sundry and its expected impact?
When will DBGI launch on TikTok Shop?
