Earnings Transcript for DBGI - Q2 Fiscal Year 2023

Operator: Greetings, and welcome to Digital Brand Group Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John McNamara. Thank you. You may begin.

John McNamara : Thank you. Good morning, everybody, and welcome again to the Digital Brands Group Second Quarter 2023 Earnings Conference Call and Webcast. With us on the call this morning is Hil Davis, Chief Executive Officer of Digital Brands. Hil will begin the call with a brief overview of the quarter, and then we'll open up the line for questions. This call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things, the company's business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date statement is made. These forward-looking statements are based largely on the company's expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond the company's control. Future developments and actual results could differ materially from those set forth and contemplated by or underlying forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. Company will be hosting a Q&A session at the conclusion as I mentioned. And with that, I will turn the call over to Hil Davis. Go ahead, Hil.

Hil Davis: Yes. Thanks, John, and good morning, everyone. As we stated during our fourth quarter and fiscal year 2022 conference call, which was in mid-April, we would experience meaningful revenue growth and significant operating leverage with the acquisition of Sundry, which was completed December of 30th last year. As you can see from our second quarter results, we did experience significant revenue growth, and we also experienced operating leverage on every line item. In fact, based on our current wholesale bookings and our current e-commerce trends, our third quarter and fourth quarter revenues will be meaningfully higher than this quarter. Again, we have visibility into our wholesale bookings. These are orders that we're already shipping and at our place. And based on that, our revenues for the third and fourth quarter will be meaningfully higher than this quarter. Additionally, we will continue to show a higher level of cost savings in our third and fourth quarters as well versus this quarter, driven by combination of layoffs and redundancies that no longer have severance attached to them or just natural league as people left after we acquired Sundry. So we are only in the first inning of this structural shift in our business. As I stated earlier, we already know what wholesale bookings are for our third and fourth quarters, and we're already selling spring now and getting very strong feedback. In addition to that, we have the additional cost synergies we will experience and then you layer on our e-commerce trends, and it is very exciting to see how this is playing out. And none of the above that I just mentioned includes the benefits from our 2 new revenue channels that we will launch this fall, which are

Operator:

Hil Davis: So thanks, everyone, for joining the call. We hope that everyone can see the significant shift in our business model and the momentum we're experiencing. And as I said, we already have a wholesale bookings for Q3 and Q4 booked, and we're already selling into Q1. And we already know the operating leverage we're going to continue to get. So we're very excited about how we're going to continue to execute against our vision that we laid out at the IPO and the acquisition of the Sundry in December 30th was the game changer we needed, and I think you're seeing it show up every quarter so far and we'll continue to do so. So with that, thanks, everyone, for the time, and we look forward to talking on our next conference call.

Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.