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One year after its listing, Digital Brands Group is battling bankruptcy

By Don-Alvin Adegeest

Apr 5, 2022

Business

Image: Digital Brands Group Bailey44

When Digital Brands Group became a listed company in May 2021, it did not foresee it would be staving off bankruptcy less than one year later.

The group, which operates brands DSTLD, ACE Studios, Bailey 44, Harper & Jones and Stateside, raised 10 million dollars at its offering, but today is warning it must raise additional capital to improve its financial standing.

After losses of 10.7 million dollars in 2021, down 30 percent from a 32.4 million dollar loss in 2020, the company said in a recent filing that it would potentially seek bankruptcy protection if it is not able to find funding to stay operational.

“We may continue to incur significant losses in the future for a number of reasons, including unforeseen expenses, difficulties, complications, delays, and other unknown events, including the length of time COVID-19 related restrictions impact the business,” DBG said in its filing.

Last August DBG acquired the Stateside brand for 10 million dollars. "Stateside is expected to be accretive to DBG's revenue and earnings per share in both the third quarter and fiscal year of 2021. Additionally, we believe the Stateside brand will drive meaningful near and long-term shareholder value," Hil Davis, DBG's Chief Executive Officer, said in a statement.

Also in August DBG acquired an equity line of credit with Oasis Capital. Mr Davis at the time said: "With this equity line established, the financial road ahead for Digital Brands has truly begun to smooth out. This equity line alleviates the immediate need to go to the capital markets for operational financing although we expect to further access the capital markets to fund future acquisitions."

While DBG’s 2021 fourth quarter revenue rose 425 to 4 million dollars, it was not substantial enough to offset its debts. According to Retail Dive DBG has been listed on S&P Global Market Intelligence's list of most vulnerable retail companies. It is currently in the crux of needing to grow through acquisitions while at the same time funding operations.

Digital Brands Group