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Digital Brands Group Inc (DBGI) Q4 2023 Earnings Call Transcript Highlights: A Detailed ...

GuruFocus Research
·4-min read

  • Net Revenues: Increased 6.8% to $14.9 million for the fiscal year.

  • Gross Margin: Increased to $6.5 million, representing a 10.2% rise.

  • Gross Profit Margins: Increased to 43.9% from 42.5% year over year.

  • G&A Expenses: Decreased 12.7% to $14.3 million, including non-cash items.

  • G&A Expenses (Excluding Non-Cash Items): Decreased 35.7% to $8.8 million.

  • Sales and Marketing Expenses: Decreased 18.5% to $4 million.

  • Net Loss Per Share: $10.2 million or $20.46 per share.

  • Net Loss (Excluding Non-Cash Charges): $8 million compared to a loss of $28.8 million prior year.

  • Q4 Net Revenues: $2.8 million compared to $3.4 million year over year.

  • Q4 Gross Profit: $0.5 million, including non-cash expenses.

  • Q4 Gross Profit Margins: Decreased to 18.3% from 19%.

  • Q4 G&A Expenses: Decreased 30.6% to $2.2 million.

  • Q4 Sales and Marketing Expenses: Decreased 13.4% to $0.8 million.

  • Q4 Net Loss Per Share: $3.7 million or $8.76 per share.

  • Q4 Net Loss (Excluding Non-Cash Charges): $0.6 million compared to $19.2 million prior year.

Release Date: April 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Net revenues increased 6.8% to $14.9 million compared to $14 million a year ago.

  • Gross margin increased 10.2% to $6.5 million compared to $5.9 million.

  • Gross profit margins increased to 43.9% from 42.5% a year ago.

  • G&A expenses, including non-cash items, decreased 12.7% to $14.3 million compared to $16.4 million a year ago.

  • Sales and marketing expenses decreased 18.5% to $4 million compared to $5 million a year ago.

Negative Points

  • Net loss per share attributable to common shareholders was $10.2 million or $20.46 per share, compared to a loss of $38 million or $1,233.10 per share.

  • Net revenues for the fourth quarter were down to $2.8 million compared to $3.4 million a year ago.

  • Gross profit for the fourth quarter was down to $0.5 million compared to $0.6 million a year ago.

  • Gross profit margins decreased to 18.3% from 19% a year ago for the fourth quarter.

  • Net loss per diluted share attributable to common shareholders for the fourth quarter was $3.7 million or $8.76 per share.

Q & A Highlights

Q: What were the key financial highlights for Digital Brands Group in the fourth quarter and full fiscal year 2023? A: CEO Hil Davis reported that net revenues increased 6.8% to $14.9 million compared to $14 million a year ago, excluding revenue from Harper & Jones. Gross margin increased 10.2% to $6.5 million compared to $5.9 million. Gross profit margins increased to $43.9 million from $42.5 million a year ago. G&A expenses, including non-cash items, decreased 12.7% to $14.3 million compared to $16.4 million a year ago. Net loss per share attributable to common shareholders was $10.2 million or $20.46 per share, compared to a loss of $38 million or $1,233.10 per share the previous year.

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Q: What were the fourth-quarter results specifically? A: For the fourth quarter, net revenues were $2.8 million compared to $3.4 million a year ago. Gross profit was $0.5 million compared to $0.6 million a year ago. G&A expenses decreased 30.6% to $2.2 million compared to $3.2 million a year ago. Net loss per diluted share attributable to common shareholders was $3.7 million or $8.76 per share. Excluding non-cash charges, the net loss was $0.6 million compared to $19.2 million a year ago.

Q: Can you explain the non-cash charges that were mentioned? A: CEO Hil Davis mentioned that the non-cash charges were associated with G&A and stock option expenses, largely related to the Sundry acquisition. These charges were taken as part of the audit process and are not expected to occur going forward.

Q: What is the significance of the S-3 filing that was mentioned? A: Hil Davis explained that the S-3 filing was an example of good corporate governance and was timed to take advantage of the highest stock price during a 60-day look-back period. It provides the company with option value in case there is a need for cash, as opposed to filing an S-1 at a later date.

Q: What are the expectations for Digital Brands Group in 2024? A: The CEO expressed excitement for the first quarter earnings of 2024, which are expected to show the strength of the business between wholesale shipments and bookings. Preliminary results from a new outlet store opening are also anticipated. The year 2024 is expected to be an inflection point for the business.

Q: Were there any questions from the participants during the Q&A session? A: No, there were no questions in the queue during the Q&A session.

This article first appeared on GuruFocus.