Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40400 DIGITAL BRANDS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 46-1942864 (State or o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-40400 DIGITAL BRANDS GROUP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R ...

Digital Brands Group, Inc. (NASDAQ:DBGI) Q2 2023 Results Conference Call August 17, 2023 10:30 AM ET Company Participants John McNamara - IR Hil Davis - CEO Operator Greetings, and welcome to Digital Brand Group Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John McNamara. Thank you. You may begin. John McNamara Thank you. Good morning, everybody, and welcome again to the Digi ...

Digital Brands Group, Inc. (NASDAQ:DBGI) Q1 2023 Earnings Conference Call May 22, 2023 10:00 AM ET Company Participants John McNamara - IR Hil Davis - CEO Operator Hello, and welcome to the Digital Brands Group, Inc. Q1 2023 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to John McNamara, Investor Relations. Please go ahead, John. John McNamara Thank you. Good morning, everyone, and welcome to the ...

Financial Performance - Net revenues increased by $1.7 million to $5.1 million for the three months ended March 31, 2023, compared to $3.4 million in the same period in 2022, primarily due to the acquisition of Sundry in December 2022 [117]. - Gross profit rose by $1.3 million to $2.4 million for the three months ended March 31, 2023, up from $1.1 million in the same period in 2022, attributed to increased revenue and gross profit from Sundry [118]. - Operating loss improved to $(3.6) million for the three months ended March 31, 2023, compared to $(5.6) million in the same period in 2022 [116]. - Gross margin increased to 47.9% for the three months ended March 31, 2023, compared to 33.2% for the same period in 2022, attributed to cost efficiencies post-Sundry acquisition and reduced discounting [119]. - Net loss decreased by $1.7 million to $6.1 million for the three months ended March 31, 2023, compared to a loss of $7.8 million in 2022, driven by higher gross profit and lower operating expenses [122]. Expenses - General and administrative expenses were $4.6 million for the three months ended March 31, 2023, compared to $4.3 million in the same period in 2022 [116]. - Sales and marketing expenses increased to $1.1 million for the three months ended March 31, 2023, from $1.0 million in the same period in 2022 [116]. - Operating expenses decreased by $0.7 million to $6.0 million for the three months ended March 31, 2023, from $6.7 million in 2022, primarily due to a $1.2 million change in fair value of contingent consideration in 2022 [120]. Cash Flow and Financing - Cash used in operating activities increased by $1.1 million to $1.7 million for the three months ended March 31, 2023, compared to $0.6 million in 2022, mainly due to changes in operating assets and liabilities [126]. - Cash provided by financing activities was $2.3 million for the three months ended March 31, 2023, including $4.3 million in net proceeds from a private transaction [128]. - Cash provided by investing activities was $87,379 in 2023 due to the return of deposits, compared to cash used of $5,576 in 2022 for property and equipment purchases [127]. - The company plans to fund its capital needs through public or private equity offerings, debt financings, or other sources over the next twelve months [124]. Debt and Working Capital - As of March 31, 2023, the company had cash of $2.0 million and a working capital deficit of $31.2 million, raising doubts about its ability to continue as a going concern [124]. - Outstanding principal on debt as of March 31, 2023, was $13.6 million, with maturity dates through 2024 [131]. Supply Chain and Costs - The company experienced increased costs in raw materials, with fabric prices rising between 10% to 100% depending on various factors [104]. - Shipping costs increased by 25% to 300% depending on the time of year and shipping origin [104]. - Supply chain disruptions have led to longer lead times for raw fabrics and increased production times [103]. Strategic Initiatives - The company aims to enhance its omnichannel strategy to drive customer acquisition and retention, leveraging both digital and physical retail channels [98]. - The company defines "closet share" as the percentage of a customer's clothing units that are from its brands, with a higher closet share indicating increased revenue potential [100]. Non-Cash Adjustments - Non-cash adjustments for the three months ended March 31, 2023, were $3.8 million, compared to $3.7 million in 2022 [125].

Digital Brands Group, Inc. (NASDAQ:DBGI) Q4 2022 Earnings Conference Call April 17, 2023 4:30 PM ET Company Participants John McNamara - Investor Relations Hil Davis - CEO Operator Greetings, and welcome to the Digital Brands Group, Inc. Q4 and Full Year 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce to your host, John McNamara of Investor Relations. Thank you, Mr. McNamara. You may begin. John McNamara Thank you, Kimora. Good ...

Financial Settlement - The company has tentatively agreed to pay $229,000 and issue $1,400,000 worth of common stock to former owners of H&J as part of a proposed settlement[19]. Revenue and Product Strategy - The company aims to increase direct-to-consumer revenue mix, which is expected to enhance margins and allow for lower price points[34]. - The company plans to launch a new product category in women's athleisure for 2024, capitalizing on a high repeat spend market[42]. - The company expects to roll out the ACE Studios brand in Q2 2023 as a digitally native first brand[47]. Brand and Market Positioning - The company operates four brands leveraging three channels: websites, wholesale, and own stores[21]. - The company identifies three ideal acquisition targets: mismanaged legacy brands, capital-constrained strong brands, and struggling wholesale brands transitioning to e-commerce[26]. - The company anticipates that pursuing acquisitions will enhance customer loyalty and increase average order value while reducing customer acquisition costs[27]. Distribution and Logistics - As of December 31, 2022, products are distributed through over 75 major department stores and more than 350 boutique stores[51]. - The company plans to review its distribution strategy in 2023, considering maintaining its own distribution centers versus using third-party solutions[62]. - The company relies on a limited number of suppliers to provide finished products, aiming to aggregate pricing power while planning to source additional factories to spread risks[60]. Marketing and Customer Engagement - The company consolidates marketing and tech contracts to achieve significant cost savings and increase operational efficiencies[29]. - The company utilizes a multi-pronged marketing strategy, with paid social media marketing as the primary customer acquisition channel, focusing on platforms like Facebook and Instagram[70]. - The company plans to develop and launch a company-wide loyalty program to engage and reward customers across all brands[87]. - The company has successfully tested retail "pop ups," resulting in higher average order value and lower customer returns[80]. Product Quality and Employee Information - The company focuses on creating high-quality, well-designed products at competitive prices, aiming to exceed consumer expectations for retention and repurchases[88]. - The company has 58 full-time employees as of December 31, 2022, with no labor-related work stoppages reported[95]. Legal and Compliance - The company’s website and related information are not considered part of the Annual Report on Form 10-K[96]. - All statements in securities filings, including forward-looking statements, are made as of the document date and are not updated unless legally required[96]. - There are no applicable quantitative and qualitative disclosures about market risk[359].

Digital Brands Group, Inc. (NASDAQ:DBGI) Q3 2022 Earnings Conference Call November 14, 2022 6:00 PM ET Company Participants Hil Davis - CEO Conference Call Participants Operator Greetings, and welcome to the Digital Brands Group Third Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce to your host, Hil Davis, CEO. Thank you, Hil. You may begin. Hil Davis Yes. Good afternoon, and welcome to the Digital Brands third quarter ...

Financial Performance - Net revenues increased by $1.2 million to $3.4 million for the three months ended September 30, 2022, compared to $2.2 million in the same period in 2021[147]. - Gross profit rose by $0.5 million to $1.7 million for the three months ended September 30, 2022, with a gross margin of 48.3%, down from 55.9% in the same period in 2021[148][149]. - Operating loss for the three months ended September 30, 2022, was $2.6 million, an improvement from a loss of $7.9 million in the same period in 2021[146]. - Net revenues increased by $7.0 million to $10.6 million for the nine months ended September 30, 2022, compared to $3.6 million in the same period in 2021, primarily due to acquisitions of H&J and Stateside[155]. - Gross profit rose by $3.9 million to $5.3 million for the nine months ended September 30, 2022, compared to $1.4 million in the same period in 2021, with a gross margin of 50.0% compared to 39.1% in 2021[156][157]. - Net loss for the nine months ended September 30, 2022, was $22.3 million, a decrease of $0.4 million compared to a loss of $22.7 million in the same period in 2021[161]. Operating Expenses - Operating expenses decreased by $4.9 million to $4.2 million for the three months ended September 30, 2022, primarily due to a $4.0 million change in fair value of contingent consideration in 2021[151]. - Operating expenses increased by $1.6 million to $24.1 million for the nine months ended September 30, 2022, driven by higher general and administrative and marketing expenses[159]. - The company expects operating expenses to rise in total dollars and as a percentage of revenues as the revenue base increases[151]. Cash Flow and Financing - Cash used in operating activities decreased by $2.6 million to $8.7 million for the nine months ended September 30, 2022, compared to $11.5 million in 2021[167]. - Cash provided by financing activities was $8.4 million for the nine months ended September 30, 2022, down from $16.7 million in the same period in 2021[169]. - As of September 30, 2022, the company had cash of $195,399 and a working capital deficit of $40.7 million, raising doubts about its ability to continue as a going concern[163]. - The company plans to fund its capital needs through public or private equity offerings, debt financings, or other sources over the next twelve months[163]. - The company sold 373,898 shares of common stock at a public offering price of $2.50 per share, generating net proceeds of $8.1 million[164]. - The company has $9.9 million in outstanding principal related to convertible notes maturing through 2023[171]. Strategic Initiatives - The company has strategically expanded into an omnichannel brand offering, blending online and physical channels to enhance customer engagement and retention[128]. - The acquisition of Stateside in August 2021 contributed to increased revenue and gross profit in 2022[147]. - The company aims to increase "closet share," defined as the percentage of a customer's clothing units that belong to its brands, to drive higher revenue[127]. Supply Chain Challenges - Supply chain disruptions have led to increased costs in raw materials, shipping, and labor, with fabric prices rising between 10% to 100% depending on various factors[131][132].

Financial Data and Key Metrics Changes - The company reported a strong top-line result with a 273% year-over-year growth in net sales, reaching $3.7 million compared to $1 million in the same quarter last year [6][17] - Gross profit margin improved to 58.1%, an increase of 450% from 39.3% a year ago, with gross profit increasing by $1.8 million due to improved margins across all brands [6][18] - General and administrative expenses decreased significantly to 133.5% of revenues from 716.7% a year ago, with G&A expenses at $5 million compared to $7.2 million in the prior year [19] - Net loss attributed to common stockholders was $9.5 million or $0.27 per diluted share, an improvement from a net loss of $10.7 million or $1.97 per diluted share a year ago [23] Business Line Data and Key Metrics Changes - The second quarter was noted as the lowest wholesale revenue quarter due to lower demand, with only two months of wholesale shipping included [8][17] - Sales and marketing expenses decreased to 45.6% of revenue from 92% a year ago, reflecting a significant reduction in marketing costs [20] - Distribution expenses also declined to 5.9% of revenue from 7% a year ago, driven by the addition of new brands and consolidation of distribution centers [21] Market Data and Key Metrics Changes - The company is entering its peak wholesale season, with expectations for increased revenue and strong gross margins in the second half of the year [9][14] - The Sundry acquisition is projected to increase revenue by over $20 million and lead to immediate positive EBITDA post-approval [12][24] Company Strategy and Development Direction - The company is focused on expanding its wholesale and direct-to-consumer channels, with a new Head of Wholesale hired to enhance revenue growth [10][14] - The strategy includes consolidating operations to reduce costs, such as sharing one office and distribution center among brands [19][15] - The company aims to move from a negative working capital cycle to a positive one by implementing factoring, which will reduce the need for borrowing [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a clear path to profitability, emphasizing the importance of the Sundry acquisition and the expected revenue growth from wholesale channels [24] - The management highlighted the challenges of a negative working capital cycle but indicated that future changes would alleviate cash flow issues [14][25] Other Important Information - The company filed a proxy for a shareholder meeting to approve the Sundry acquisition and a reverse stock split to comply with NASDAQ listing rules [12][13] - The management noted that there were no inventory write-downs in the quarter, indicating strong brand performance [18] Q&A Session Summary - There were no questions from participants during the Q&A session, and the management reiterated the company's growth trajectory and upcoming acquisitions [26]