Digital Brands Group Reports Revenue Decline and Improved Net Loss in Q2 2025

Digital Brands Group, Inc. reported a decline in financial performance for the second quarter of 2025, with net revenues of $2.25 million, down from $3.40 million in the same period last year. For the first half of 2025, revenues totaled $4.12 million, a decrease from $6.97 million in the prior year. The company attributed this decline primarily to the loss of its largest wholesale account, which had low gross margins. Despite the revenue drop, the net loss for the quarter improved to $2.12 million from $3.51 million in 2024, largely due to reduced interest expenses and operational cost-cutting measures.

The company's gross profit for the second quarter was $711,552, down from $1.56 million a year earlier, resulting in a gross margin of 32%, compared to 46% in the previous year. The decrease in gross profit was influenced by lower sales and approximately $0.5 million in inventory write-offs. Operating expenses also decreased to $2.70 million from $3.86 million, reflecting significant headcount reductions and operational efficiencies. The company expects to further reduce operating expenses by an additional $0.7 million over the next year.

In terms of strategic developments, Digital Brands Group has been actively expanding its brand portfolio and distribution channels. The company recently entered into exclusive private label manufacturing agreements with AAA Tuscaloosa, LLC, and Traffic Holdco, LLC, to produce apparel for the University of Alabama and other university clients. These partnerships are expected to enhance brand visibility and drive revenue growth. Additionally, the company completed a private offering in August 2025, raising approximately $16.23 million, which is anticipated to support its operational and capital needs.

As of June 30, 2025, Digital Brands Group reported total assets of $27.82 million, with current liabilities of $20.71 million, resulting in a working capital deficit of $8.92 million. The company had cash and cash equivalents of $542,578 at the end of the quarter. Management believes that the recent capital raise and ongoing marketing efforts will help alleviate liquidity concerns and support future growth. The company is focused on increasing its customer base through both online and traditional wholesale channels, while also aiming to improve gross margins through effective sourcing and pricing strategies.

Looking ahead, Digital Brands Group anticipates that the decline in wholesale revenue will be offset by the expansion of its second-largest wholesale account and increased digital revenue. The company is committed to leveraging its operational efficiencies and cost-cutting measures to enhance profitability. However, it remains cautious about the potential impact of ongoing supply chain disruptions and market conditions on its financial performance.