US' Digital Brands Group's net revenues soar 48.4% in Q1 FY23

The company reported a gross margin growth of 113.9 per cent in Q1 FY23 compared to the same period last year. Rising from $1.1 million a year ago, gross margin reached $2.4 million in Q1 FY23. This leap can be largely attributed to the increase in gross profit margins, which significantly jumped from 33.2 per cent to 47.9 per cent year-on-year (YoY).

In Q1 FY23, the firm saw a rise in general and administrative expenses by 8.4 per cent to $4.6 million compared to $4.3 million during the same quarter of the previous year. However, the general and administrative expenses as a percentage of revenue improved significantly, falling from 124.6 per cent a year ago to 91 per cent, the company said in a press release.

Sales and marketing expenses also saw an uptick of 7.2 per cent in Q1 FY23, reaching $1.1 million compared to the $1.0 million reported a year ago. Despite this, the ratio of sales and marketing expenses to revenues improved, decreasing from 30.3 per cent to 21.9 per cent YoY.

Hil Davis, chief executive officer of Digital Brands Group, said: "Our business is completely different now than it was in 2022.  We lost a year due to the market decline in 2022, which delayed our acquisition of Sundry. We knew this acquisition was the critical step in our path to build a company with scale, positive EBITDA and positive cash flow. Now that the Sundry acquisition has closed, we are well on our way to achieving our initial goals."

We are also excited for the forecasted monthly free cash flow that we will generate this fall associated with the transition to positive EBITDA coupled with the end of our MCA payments in early October.  We should generate over $500,000 in free cash flow monthly starting after our last MCA payment."

Digital Brands Group reported a decline in operational loss for the quarter. Compared to a loss of $5.6 million in the corresponding quarter a year ago, Q1 FY23 saw the loss from operations shrink to $3.6 million.

Fibre2Fashion News Desk (DP)