Digital Brands Group(DBGI) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased 51% year-over-year to $1.0 million compared to $664,000 in the same period of 2020, representing a $340,000 increase driven by Bailey-44 and Harper & Jones [17] - Net loss increased by $8.4 million to a loss of $10.7 million for the three months ended June 30, 2021, primarily due to noncash expenses associated with stock-based compensation and changes in fair value of contingent liabilities [28] - Gross profit margin increased to 39.3% from a negative 40.4% year-over-year, reflecting an increase of $663,000 across all brands [21] Business Line Data and Key Metrics Changes - Bailey-44 experienced a revenue ramp post-COVID, contributing significantly to the overall revenue increase [18] - Harper & Jones contributed to revenue for approximately 6 weeks post-acquisition, indicating a positive impact on overall sales [17] - DSTLD's core denim and tees are back in stock, with expectations for strong fall product availability [19] Market Data and Key Metrics Changes - Wholesale bookings for Bailey-44 are trending at pre-pandemic levels, with strong sales expected for January and February [34] - The company is seeing an acceleration in wholesale booking orders for fall, aligning with pre-pandemic levels [10] Company Strategy and Development Direction - The company is focused on an acquisition-oriented strategy, planning to acquire more companies this year, which will require GAAP PCAOB audits [13] - A significant marketing and advertising plan is being developed, including an Amazon marketing strategy, expected to roll out in the fall [11] - The company aims to drive both organic revenue growth and earnings through strategic acquisitions and improved marketing efforts [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving business trends continuing into the third quarter and fourth quarter of 2021, supported by sufficient cash and inventory [7][8] - The company anticipates significant improvements in gross margins for Bailey-44 and DSTLD in the upcoming quarters as inventory levels stabilize and marketing strategies are fully implemented [22][24] - Management highlighted the transition from a pre-IPO to a post-IPO company, emphasizing the stronger cash position and marketing budget [30] Other Important Information - Operating expenses increased significantly due to noncash charges related to the IPO and acquisition of Harper & Jones, totaling $7.3 million in one-time expenses [25] - The company is excited about the launch of its first Ready-to-Wear program for Harper & Jones, which is expected to enhance revenue and growth [35] Q&A Session Summary Question: What are the expectations for the upcoming quarters? - Management is excited about the trends seen in Q2 and into Q3, with Bailey-44 trending at pre-pandemic levels and strong wholesale bookings confirmed for fall [37] Question: How is the integration of Harper & Jones progressing? - Harper & Jones will be fully integrated into Q3 results, with positive responses to the new Ready-to-Wear program [37] Question: What is the outlook for marketing efforts? - The company plans to launch a significant marketing strategy this fall, which has not been pursued for over a year, expected to drive significant upside for all brands [36]