Dive Brief:
- Continuing to operate as a going concern, Digital Brands Group reported third-quarter net revenue increased 22.5% year over year to about $3.3 million, according to a Tuesday press release and a filing with the U.S. Securities and Exchange Commission.
- The company’s operating expenses increased about 51% to $5.1 million and its net loss grew 11% to $5.4 million.
- Meanwhile, Digital Brands Group’s loss from operations increased 40% to $3.4 million. Gross profit margins increased from 36% to 52.3%.
Dive Insight:
Digital Brands Group — which owns brands such as Stateside, Bailey 44 and more — remained upbeat about its performance following the acquisition of Sundry.
"The increase in our revenue, coupled with the cost synergies, has resulted in meaningful operating leverage and internal free cash flow that started in October,” CEO Hil Davis said in a statement. “We expect our internal free cash flow to continue going forward."
Digital Brands Group’s net loss for the nine months ending Sept. 30 was $6.5 million compared to $22.3 million during the same period the year before. As of Sept. 30, the company had a working capital deficit of about $14.7 million.
The latest results come about a week after Digital Brands Group announced it would consider strategic alternatives in an effort to maximize value for shareholders, though the review process has no deadline and cannot guarantee a specific outcome. At the time, Davis said that there was “dislocation between Digital Brand Group’s public market value and the intrinsic value of Digital Brands Group’s underlying assets.”
The move comes about eight months after Davis announced on a call with analysts that the company was considering going private, stating Digital Brands Group was approached by a private equity firm.
A few hours after Digital Brands Group released a press release about considering strategic alternatives on Nov. 6, Davis posted on X — formerly known as Twitter — that the company was “already getting inbound requests from outside parties.”
