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Digital Brands Group Reports First Quarter 2024 Financial Results
Source: Nasdaq GlobeNewswire / 20 May 2024 09:30:00 America/New_York
Loss from operations was $225,000 versus $3.7 million a year ago
Austin, TX, May 20, 2024 (GLOBE NEWSWIRE) -- Digital Brands Group, Inc. (“DBG”) (NASDAQ: DBGI), a curated collection of luxury lifestyle, digital-first brands, today reported financial results for its first quarter ended March 31, 2024.
“Despite a timing shift in our wholesale shipments, which shifted revenue from the first quarter to the second quarter, we experienced significant operating expense leverage. We expect this operating leverage to continue throughout the year. In fact, this operating leverage coupled with higher revenues will result in higher flow through to our operating and net income,” said Hil Davis, CEO of Digital Brands Group.
Results for the First Quarter
- Net revenues were $3.6 million compared to $4.4 million a year ago
o Net revenues were negatively impacted by wholesale shipments that slipped from the end of March to the first half of April
o This wholesale revenue shift will benefit our second quarter revenue
- Gross profit margins increased to 48.1% compared to 45.5% a year ago
o Gross profit was $1.7 million compared to $2.0 million a year ago
- G&A expenses decreased to $1.0 million compared to $4.5 million a year ago
o G&A expense ratio was 27.2% compared to 100.5% a year ago
- Sales & Marketing expenses were $700,000 compared to $1.0 million a year ago
o Sales and marketing expenses ratio was 19.8% compared to 22.0% a year ago
- Net operating loss was $225,000 compared to a loss of $3.7 million a year ago
- Net loss was $684,000, or a loss of $0.46 per diluted share, compared to a loss of $6.1 million, or a loss of $27.48 per diluted share, a year ago
Conference Call and Webcast Details Updated
Management will host a conference call on Monday, May 20, 2024 at 10:30 a.m. ET to discuss the results. The live conference call can be accessed by dialing 888-506-0062 from the U.S. or internationally. The conference I.D. code is 817721 or referencing Digital Brands or via the web by using the following link: https://www.webcaster4.com/Webcast/Page/3044/50662.
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.
DIGITAL BRANDS GROUP, INC
STATEMENT OF OPERATIONSThree Months Ended March, 31 2024 2023 Net revenues $ 3,576,587 $ 4,439,508 Cost of net revenues 1,855,851 2,420,194 Gross profit 1,720,736 2,019,314 Operating expenses: General and administrative 971,732 4,460,462 Sales and marketing 708,150 977,154 Distribution 265,499 270,185 Total operating expenses 1,945,381 5,707,802 Loss from operations (224,645 ) (3,688,487 ) Other income (expense): Interest expense (504,991 ) (1,864,598 ) Other non-operating income (expenses) 45,901 (678,989 ) Total other income (expense), net (459,090 ) (2,543,587 ) Income tax benefit (provision) - - Net loss from continuing operations (683,735 ) (6,232,075 ) Income from discontinued operations, net of tax - 95,726 Net loss $ (683,735 ) $ (6,136,349 ) Weighted average common shares outstanding - basic and diluted 1,485,210 226,814 Net loss per common share - basic and diluted $ (0.46 ) $ (27.48 )
The accompanying notes are an integral part of these financial statements.DIGITAL BRANDS GROUP, INC
STATEMENTS OF CASH FLOW
Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ (683,735 ) $ (6,136,349 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,117,240 959,207 Amortization of loan discount and fees 492,858 1,412,425 Loss on extinguishment of debt - 689,100 Stock-based compensation 100,299 105,594 Shares issued for services 224,265 499,338 Change in credit reserve (151,611 ) 109,298 Changes in operating assets and liabilities: Accounts receivable, net (207,071 ) 282,947 Due from factor, net (297,951 ) (77,776 ) Inventory 201,127 299,188 Prepaid expenses and other current assets (24,545 ) (218,286 ) Accounts payable (1,409,514 ) (416,093 ) Accrued expenses and other liabilities (440,775 ) 464,855 Deferred revenue - 115,292 Accrued interest (161,130 ) 218,740 Net cash used in operating activities (1,240,541 ) (1,692,520 ) Cash flows from investing activities: Purchase of property, equipment and software (13,785 ) - Deposits - 87,379 Net cash provided by (used in) investing activities (13,785 ) 87,379 Cash flows from financing activities: Repayments from related party advances (1,233 ) (104,170 ) Advances from factor 27,936 217,625 Issuance of loans and note payable - 3,542,199 Repayments of convertible notes and loan payable (518,026 ) (5,677,621 ) Issuance of common stock for cash 1,736,206 5,000,003 Offering costs - (686,927 ) Net cash provided by financing activities 1,244,882 2,291,109 Net chane in cash and cash equivalents (9,443 ) 685,968 Cash and cash equivalents at beginning of period 20,773 1,283,282 Cash and cash equivalents at end of period $ 11,330 $ 1,969,250 Supplemental disclosure of cash flow information: Cash paid for income taxes $ - $ - Cash paid for interest $ - $ 60,465 Supplemental disclosure of non-cash investing and financing activities: Right of use asset $ - $ 467,738 The accompanying notes are an integral part of these financial statements.
DIGITAL BRANDS GROUP, INC
STATEMENT OF BALANCE SHEETSMarch 31, December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 11,330 $ 20,773 Accounts receivable, net 281,904 74,833 Due from factor, net 759,437 337,811 Inventory 4,648,473 4,849,600 Prepaid expenses and other current assets 301,215 276,670 Total current assets 6,002,359 5,559,687 Property, equipment and software, net 69,294 55,509 Goodwill 8,973,501 8,973,501 Intangible assets, net 9,262,670 9,982,217 Deposits 75,431 75,431 Right of use asset 465,069 689,688 Total assets $ 24,848,324 $ 25,336,033 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 6,266,814 $ 7,538,902 Accrued expenses and other liabilities 4,317,717 4,758,492 Due to related parties 398,779 400,012 Convertible note payable, net 100,000 100,000 Accrued interest payable 1,835,623 1,996,753 Loan payable, current 2,300,674 2,325,842 Promissory note payable, net 5,057,666 4,884,592 Right of use liability, current portion 1,073,389 1,210,814 Total current liabilities 21,350,662 23,215,407 Loan payable 150,000 150,000 Deferred tax liability 368,034 368,034 Total liabilities 21,868,696 23,733,441 Commitments and contingencies Stockholders' equity: Undesignated preferred stock, $0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both March 31, 2024 and December 31, 2023 - - Series A convertible preferred stock, $0.0001 par, 6,300 shares designated, 6,300 shares issued and outstanding as of both March 31, 2024 and December 31, 2023 1 1 Series C convertible preferred stock, $0.0001 par, 3,239 and 4,786 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 1 1 Common stock, $0.0001 par, 1,000,000,000 shares authorized, 1,714,157 and 1,114,359 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 169 110 Additional paid-in capital 117,657,641 115,596,929 Accumulated deficit (114,678,184 ) (113,994,449 ) Total stockholders' equity 2,979,628 1,602,592 Total liabilities and stockholders' equity $ 24,848,324 $ 25,336,033
The accompanying notes are an integral part of these financial statements.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) 593-1047SOURCE Digital Brands Group, Inc.
Related Links
https://www.digitalbrandsgroup.co
https://ir.digitalbrandsgroup.co