Digital Brands Group Reports Third Quarter 2024 Financial Results

Austin, TX, Nov. 14, 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 third quarter ended September 30, 2024.

“Our third quarter was the last quarter we significantly focused on paying down debt and liabilities given the soft macro economy and the overhang of the election. Starting in October this year, we transitioned from cleaning up the balance sheet to focusing on increasing top line growth. As we stated in our press release yesterday, we partnered with VAYNERCOMMERCE to drive digital revenue, which we announced is already working”.

“This was the first step in a multi-step growth strategy, coupled with the launch of AVO. New initiatives include investing in other digital channels and platforms, content creation, influencer partnerships, and monthly limited-edition capsules of online only products with special pricing, fabrics and designs. ”

“In addition to this, the Company will also benefit by an increase of over $4.5 million in earnings associated with amortized non-cash expenses concluding at the end of 2024 plus a Sundry wholesale price increase,” said Hil Davis, CEO of Digital Brands Group.

Results for the Third Quarter

• Net revenues were $2.4 million compared to $3.3 million a year ago
  • The majority of the decline in revenue is associated with the Company dropping its largest wholesale account due to single-digit gross margins before the required additional expenses to manage the account.
  • This account was net negative in cash contribution. So while we lost revenue, we increased profitability
  • Net revenues were negatively impacted by limited digital advertising spend, which resulted in low e-commerce revenue
• Gross profit margins were 46.0% compared to 52.3% a year ago
  • The biggest factor in the decline is the fixed costs associated with gross margins including warehouse rent and labor expenses, pattern makers and sewers expenses and some design members expenses
  • Gross profit margins were negatively impacted by lower digital revenue associated with limited digital advertising revenue in the quarter
  • Gross profit was $1.1 million compared to $1.7 million a year ago
• G&A expenses decreased $1.3 million to $2.4 million compared to $3.7 million a year ago
  • G&A included $1.6 million in non-cash expenses
  • G&A expenses declined sequentially by over $500,000 from Q2 2024
• Sales & Marketing expenses were $655,000 compared to $1.2 million a year ago
  • Sales and marketing expenses ratio was 26.9% compared to 35.3% a year ago
  • The majority of the sales and marketing expense was the marketing team
  • We have outsourced our sales and marketing to VAYNERCOMMERCE
• Net loss was $3.5 million compared to a net loss of $5.4 million a year ago, which includes $1.6M in non-cash expenses
  • Starting in Q1 next year, interest expenses will decline to $105,000 a quarter due to the completion of the amortization at year end
  • This amortization change in our interest expense will result in a benefit of approximately $3.1 million to our net earnings in fiscal 2025
• Net loss per diluted share was $1.63 per diluted share compared to a net loss per diluted share of $14.55 a year ago

DIGITAL BRANDS GROUP, INC
STATEMENT OF OPERATIONS