A year after its IPO, Digital Brands Group is on the verge of bankruptcy

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When Digital Brands Group went public in May 2021, it hadn’t expected it to avoid bankruptcy less than a year later.

The group, which operates the DSTLD, ACE Studios, Bailey 44, Harper & Jones and Stateside brands, raised $10m in its offering but today warns it needs to raise additional capital to improve its financial situation .

After losses of $10.7 million in 2021, down 30% from a loss of $32.4 million in 2020, the company said in a recent filing that it would potentially seek protection against the bankruptcy if it was unable to find funds to remain operational.

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

Last August, DBG acquired the Stateside brand for $10 million. “Stateside is expected to be accretive to DBG’s third quarter and fiscal 2021 revenue and earnings per share. Additionally, we believe the Stateside brand will drive significant shareholder value in the short and long term,” said Hil. Davis, CEO of DBG. officer, said in a statement.

Also in August, DBG acquired a line of credit with Oasis Capital. Mr Davis said at the time: “With this equity line established, the financial road ahead for digital brands has really started to level out. This equity line mitigates the immediate need to go on the capital markets for operational financing, although we plan to further access capital markets to finance future acquisitions.

While DBG’s revenue in the fourth quarter of 2021 increased from $425 million to $4 million, it was not substantial enough to offset its debts. According to Retail Dive, DBG is on S&P Global Market Intelligence’s list of most vulnerable retail companies. It is currently at the heart of a need for growth through acquisitions while financing operations.

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