Digital Brands Group, Inc.‘s new website lets customers shop three of its women’s labels on one unified platform.
The Bailey Shop’s digital address at www.bailey44.com offers products from contemporary women’s wear brand Bailey 44, elevated basics brand Stateside and premium denim brand Dstld, giving customers a single destination conducive to cross-selling. Dstld and Stateside’s e-commerce sites are still around for customers who want to shop the standard experience.
The owner of digitally native fashion brands says the e-commerce upgrade drove online revenue up 462 percent since it launched on Oct. 23.
DBG also touted a 36.5 percent increase in average order value (AOV) to $280 per order from $205. Customers also purchased multiple brands in one order, supporting the company’s belief that shoppers wants to buy looks and styles across multiple brands. DBG hasn’t seen revenue decline on each brand’s dedicated website, suggesting that new Bailey Shop transactions were incremental to those happening on the other monobrand platforms.
“We are extremely excited to see that customers were building outfits and styles using products from multiple brands in their orders. This only deepens our belief that we are building a large and scalable platform that should become more rewarding and engaging for customers as we add more brands to our portfolio and website,” said Laura Dowling, DBG chief marketing officer.
By focusing advertising dollars on the new multi-brand site and slowing spend on the dedicated brand websites, DBG has been able to reduce its total advertising spend, according to Dowling.
“This allows us to drive higher return on our advertising dollars while increasing both our revenues and customer lifetime value,” she said.
The site launch comes as Digital Brands Group continues to integrate its newest business into the fold. Nine months after initially announcing a deal to acquire global lifestyle apparel brand Sundry for $41.5 million, DBG revealed in October that it revised the terms of the deal.
Another women’s apparel label under the DBG umbrella, Sundry and its ocean-lifestyle ethos bring a new dimension to the brand portfolio.
DBG CEO Hil Davis said the new site “sets a strong foundation to which we can add additional brands, like Sundry, as we bring them into our portfolio. Additionally, this should drive a meaningful increase in revenues and customer retention as the customer can now shop in one location and build the looks and styles they want across our different brands.”
Investors voted to approve the shares issued for the Sundry acquisition, expected to close this month, at the company’s Oct. 3 shareholder meeting.
Under the terms of the revised agreement, which has been amended for the second time, Sundry stakeholders will receive $7.5 million in cash and $1 million in equity valued at the issuance price, and take on $5.5 million in debt.
When the deal was first announced in January, DBG set the price for Sundry for $7.5 million in common stock, on top of $34 million represented by $20 million of cash and $14 million in promissory notes due Dec. 31, 2022.
As for DBG, the company is adding to a portfolio that also includes made-to-measure suiting seller Harper & Jones. Like the recently acquired Stateside, Sundry collections are designed and manufactured in Los Angeles.
Founded in 2011, Sundry offers women’s clothing, including dresses, shirts, sweaters, skirts, shorts, athleisure bottoms and other accessories. Sundry’s “coastal casual” products offer “a distinct French chic, resembling the spirits of the French Mediterranean and the energy of Venice Beach in Southern California.”
Sundry generated $22.8 million in revenue in 2021; and the acquisition is expected to be accretive to EBITDA immediately upon completion. Overall, DBGI anticipates combined EBITDA for the September through December period to be flat to negative $500,000.
In an August earnings call, Davis said he believes the company will save money by having a single distribution center, a single office and shared marketing for Sundry.
The brand’s inclusion in DBG is another part of the company’s focus on owning the customer’s “closet share” by leveraging their data and purchase history to create personalized targeted content and looks for that specific customer cohort.
Going forward, Davis said in the call that the company is looking forward to both the Sundry acquisition and “future acquisitions,” suggesting that the firm is not done bringing in new labels.
In constructing a house of digitally native vertical brands, Digital Brands Group wants to control its own distribution, while sourcing products straight from third-party manufacturers and selling directly to the end consumer.
Ahead of the closing, DBGI entered a debt-for-equity exchange agreement with its senior lender, Black Oak Capital to repay and retire approximately $6.25 million in principal debt. According to the private equity firm, this debt exchange puts DBG’s balance sheet in a strong position to pursue further acquisitions, which has been a hallmark for the company since its 2020 initial public offering.
For its second quarter, DBG delivered top-line sales growth of 273 percent to $3.7 million, along with gross margins of 58.1 percent, representing a a 19.8 percentage-point-jump from the year prior. Net losses amounted to $10.7 million in the quarter.
Additionally, this is the first quarter Digital Brands Group did not incur any inventory writedowns associated with older product.