Digital Brands Group Inc., parent to DSTLD and Sundry, said it aims to work through excess inventory by opening its first-ever store in a Texas outlet mall.
The Austin, Texas-based company, which also has an office in Vernon, Calif., said the new store at the Simon Premium Outlet Mall in Allen, Texas will help it sell excess inventory from its Sundry label. The store is expected to open in the first half of April, Digital Brands said.
“We are excited to begin the retail store phase of our growth strategy,” Digital Brands CEO Hil Davis said in a statement Tuesday.
Digital Brands unveiled ambitious plans last month to open more than 50 stores over the next few years. The company estimated at the time each door will generate more than $1.5 million in sales. It’s unclear if the doors will be a mix of outlet and full-price shops, or if they’ll carry all Digital Brands Group labels.
The company owns the Bailey 44, DSTLD, Stateside and Sundry brands, all of which are serviced by a warehouse and distribution center in Vernon.
Strategic Review
Harper & Jones, a mostly direct-to-consumer men’s brand, was spun off from the business last year as part of a strategic review that continues for the Digital Brands portfolio.
Digital Brands initially started off in Los Angeles with the upscale, direct-to-consumer denim brand DSTLD (pronounced “distilled”), which touted itself as the first fashion label to raise money through Reg A+ financing.
Digital Brands went on a buying spree in more recent years beginning with the women’s line Bailey 44, which it acquired in February 2020. In 2021, the company bought Harper & Jones and Stateside. The next year it added Sundry.
The company’s brands have tested brick-and-mortar in the past through pop-ups, which Digital Brands said in its 2022 annual report resulted in higher average order values, lower return rates and a boost in repurchases.
“We view these retail locations as a marketing strategy, similar to allocating funds toward digital/online marketing,” the company said in its annual report. “We expect our pop-ups to generate a small to break even profit, which is more than offset by any potential marketing costs to acquire those customers in another marketing channel.”
Inventory Glut
In the case of the upcoming Texas outlet store, the door is predominantly focused on clearing through inventory the business is sitting on.
Digital Brands said opening its own door will yield higher margins than selling its Sundry merchandise to off-price retailers.
Digital Brands’ portfolio is currently under strategic review, with the company recording 2022 net revenue of $13.97 million, compared to $7.58 million in the prior year. The company’s net loss in 2022 totaled $38.04 million, compared to $32.36 million in 2021.
The company said in its most recently reported quarter, ended Sept. 30, net revenue rose 22.5% to $3.3 million, with its net loss widening to $5.4 million from $4.9 million in the year-ago period.
Digital Brands earlier this month reiterated previously stated 2024 guidance of revenue in the range of $27 million to $30 million and EBITDA of $1.5 million to $2 million.
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