Digital Brands Group, Inc. (NASDAQ: DBGI) shares surged 67% intraday on Thursday to $8.80 on massive volume after the company guided for an expected 100% increase in revenues on a sequential basis. The better news is that the increase still only accounts for about seven weeks of its Harper & Jones acquisition revenues. Better still, its planned acquisition of Stateside clothing could be near its closing, adding yet another substantial revenue stream to its expanding brand portfolio. Thus, on a revenues multiple, DBGI may conceivably be undervalued even at its $8.80 level.
In fact, assuming that the deal with Stateside apparel is consummated, those revenues will add to the more than $900,000 contribution expected from its Harper & Jones acquisition. And with logistics channels strengthening as pandemic-related headwinds ease, revenues at Harper & Jones could contribute considerably more in the next two quarters. Combining value from its other compelling brands, DBGI appears to be set up for a tremendous surge in valuation heading into the back half of 2021.
Still, as we noted prior, consider the planned acquisition of Stateside as speculative. With that said, however, DBGI management has been executing its acquisition and brand development strategy at near-flawless levels. And that should provide confidence that this deal will get done.
Keep in mind, too, DBGI will benefit from its other compelling brands also positioned to contribute substantially to revenue growth in the next two quarters.
Revenues On The Rise From Brand Portfolio
In fact, DBGI has already guided for revenues from Harper & Jones, Bailey 44, and DSTLD to all increase in the back half of 2021. And that growth may get accelerated through a comprehensive marketing campaign, integration into Amazon Marketplace, and, as noted, the acquisition of another revenue-generating asset, Stateside. Best of all, those efforts are expected to provide a boost to its current quarter.
Better still, the "post-IPO" DBGI plans to leverage its strengthened balance sheet to grow its brand portfolio sooner rather than later. And that includes increasing existing brand sales as well. Last month, the company announced that DSTLD inventories are building to support a considerable increase in demand, and its Bailey 44 products are seeing a significant acceleration of wholesale booking orders into the Fall. In fact, they noted that Bailey 44 is nearing wholesale order levels that compare to pre-COVID levels. Indeed, that's a bullish sign.
And, after factoring in potential revenues from Stateside, DBGI would undoubtedly be in its strongest operating position even to capitalize on a number of additional acquisition and brand development opportunities. Moreover, by focusing on acquiring brands that are immediately accretive and can benefit from its digitally-focused sales model, those deals can generate immediate high-margin revenues. Thus, even DBGI's bullish guidance may prove to be conservative. And with other deals likely to happen before year's end, that's likely.
Moreover, it's important to value that DBGI's digitally-focused sales model is designed to maximize every dollar of revenue. It also keeps them away from the fading era of brick-and-mortar retail, which is getting abandoned by even the most prominent brand owners. In fact, Macy's (NYSE: M) is substantially increasing its marketing budget to increase its online presence, and Naked Brands (NASDAQ: NAKD) recently announced its divestiture of Bendon Ltd. to rid itself of the costs related to operating a retail store location. In essence, DBGI is already doing what they want to do, showing that the company may indeed be ushering in the future of retail.
The best part of it all is that DBGI is executing its strategy in the right market at the right time.
A Surge In Retail Apparel Sales In 2H 2021
Keep in mind, analysts expect that the post-COVID retail environment will likely surge in the back half of this year, especially online sales. Moreover, as consumers shifted to online purchasing during the past 18 months, they expect that part of the sales channel to be most positively impacted. And, with pent-up demand combined with stimulus dollars, the retail atmosphere, which DBGI feeds, could see one of the sharpest snap-back rallies ever. That's also excellent news for DBGI.
Moreover, after closing its IPO, its revenue recognition of Harper & Jones, and taking advantage of its lean capital structure, DBGI is better positioned and capitalized than ever to maximize its potential from recovering retail markets. And if it closes on the Stateside deal, they get even stronger.
Bottom line- the rally in DBGI shares is justified. It also shows that investors are paying attention to what the company is doing. And despite giving back some of those gains after trading more than 3X its float, expect that when prices settle, the stock will resume its upward trajectory. After all, it's unlikely that its planned Stateside acquisition and 100% revenue growth will be the last of the good news this year. Thus, staying bullish on DBGI may be the right play.
Disclaimers: Hawk Point Media is responsible for the production and distribution of this content. Hawk Point Media is not operated by a licensed broker, a dealer, or a registered investment adviser. It should be expressly understood that under no circumstances does any information published herein represent a recommendation to buy or sell a security. Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The information made available by Hawk Point Media is not intended to be, nor does it constitute, investment advice or recommendations. The contributors may buy and sell securities before and after any particular article, report and publication. In no event shall Hawk Point Media be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or made available by Hawk Point Media, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information in this video, article, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. Hawk Point Media strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D. For some content, Hawk Point Media, its authors, contributors, or its agents, may be compensated for preparing research, video graphics, and editorial content. As part of that content, readers, subscribers, and website viewers, are expected to read the full disclaimers and financial disclosures statement that can be found by clicking HERE.
The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be forward looking statements. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results.Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investors investment may be lost or impaired due to the speculative nature of the companies profiled.
Media Contact
Company Name: Hawk Point Media
Contact Person: KL Feigeles
Email: info@hawkpointmedia.com
Phone: 3057806988
City: Miami Beach
State: Florida
Country: United States
Website: https://www.hawkpointmedia.com
