Keep in mind, too, its revenue contribution from Stateside follows those from Harper & Jones, a company that came with its IPO in Q2. That company alone is expected to bring more than
The value proposition gets more interesting after taking a sum total of its parts. Using apparel industry multiples for revenues and EBITDA, which value at nearly 10X and 12X, respectively, DBGI's rally on Tuesday is more than deserved. It's overdue. In fact, combining DBGI's known sales with its guidance, a more accurate share price could be near the
And, while its small trading float and roughly 11.3 million shares outstanding can create some violent swings, it appears as though the path of least resistance on a multiples basis is to the upside.
Adding To Its Brand Portfolio
Furthermore, from a valuation perspective, there's a lot of space to fill between its share price and asset-based intrinsic value. And if DBGI meets its decidedly bullish guidance, higher prices can be earned and held.
Of note, DBGI expects revenues from Harper & Jones, Bailey 44, and DSTLD to all increase in the back half of 2021. Perhaps helping exceed its guidance, current and future quarters will be enhanced by a comprehensive marketing campaign, a strengthened balance sheet, and its integration into
Further, coming off its successful IPO last quarter, DBGI has tools in its arsenal to drive top-line growth sooner rather than later. Better yet, their responsible capital structure puts them in an excellent position to continue their strategy to find and execute on its accretive acquisition initiatives. For investors pre and post-IPO, the moves made by management during the past three months appear to be transformational to the company. Moreover, they are accelerating its growth. That was happening even before this morning's announcement.
Last month, DBGI noted that DSTLD inventories are building to meet a considerable increase in demand. And its Bailey 44 brand is following suit, also seeing an acceleration of wholesale booking orders ahead of the Fall season. Notably, DBGI added another bullish comment, saying that Bailey 44 is nearing wholesale order levels that compare favorably to pre-COVID levels. Hence, with at least four brands contributing to a surging revenue stream combined with a normalizing market, the logical expectation is for shares to move higher in tandem. Chances are they will.
Know this too, DBGI's digitally-focused sales model is intending to maximize every dollar of revenue earned. They can do that by streamlining their sales channels and controlling the manufacturing process from sourcing to end-sale. Thus, every dollar in sales has substantially more impact than traditional apparel retailers with very slim operating margins.
Moreover, DBGI is positioning itself to be a leading player in the shift from traditional retail. And while small compared to brick and mortar competitors like
For example,
That's happening throughout the sector. So much so that malls may soon become charging stations for electric vehicles. That's no exaggeration, either. Mall REITs are already considering how to manage their abandoned properties. Thus, DBGI may be on point when they say its digital business model is the future of retail. If so, expect quality revenues to hit its books.
Profiting On A Retail Rebound
And those revenues may surge heading into the back half of 2021, with apparel sector analysts expecting consumers to drive retail apparel sales substantially higher in Q3 and Q4. And with stimulus cash combined with the roughly 18 months of logistical headwinds easing, they may be right to expect a perfect storm of opportunity to those positioned to benefit from massive dollars coming off the sidelines. DBGI is. Moreover, it's reporting of
And with its Q2 now history, and with an economy expanding quickly, fueled with pricing power, expect DBGI's four brands to hit the fall fashion season with momentum. Further, consider its
Indeed, that funding puts its acquisition strategy into high gear, which DBGI has said from the start is a huge part of its corporate strategy. Also, keep in mind DBGI will be frugal in its mission, saying they carefully screen acquisition candidates to meet specific criteria, including having accretive synergies and being socially conscious in its manufacturing and marketing practices. Further, the company prefers its brands to sell on both the retail and wholesale sides of the sale. Its wholesale model hopes to feed the expected market frenzy with inspiring apparel that targets consumers appreciating its stylish and Eco-friendly fashions.
Hence, with a well-designed, active, and accretive business model, the rally this morning is more than justified. They completed a substantial acquisition and secured a massive line of credit. Further, its Bailey 44 and DSTLD brands are selling into hot demand, and DBGI is guiding for additional near-term acquisitions to add to its already impressive brand portfolio. Thus, on a valuation basis alone, expect the trend higher to continue. And with only about 11.3 million shares outstanding as of its latest filing, the stock has shown that when demand for shares percolates, its shares can fly.
Keep an eye on DBGI. This growth story is only just beginning.
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Forward-Looking Statements: Certain information set forth in this presentation contains "forward-looking information", including "future-oriented financial information" and "financial outlook", under applicable securities laws (collectively referred to herein as forward-looking statements). Except for statements of historical fact, the information contained herein constitutes forward-looking statements and includes, but is not limited to, the (i) projected financial performance of the Company; (ii) completion of, and the use of proceeds from, the sale of the shares being offered hereunder; (iii) the expected development of the Company's business, projects, and joint ventures; (iv) execution of the Company's vision and growth strategy, including with respect to future M&A activity and global growth; (v) sources and availability of third-party financing for the Company's projects; (vi) completion of the Company's projects that are currently underway, in development or otherwise under consideration; (vi) renewal of the Company's current customer, supplier and other material agreements; and (vii) future liquidity, working capital, and capital requirements. Forward-looking statements are provided to allow potential investors the opportunity to understand authors beliefs and opinions in respect of the future so that they may use such beliefs and opinions as one factor in evaluating an investment. Investors should never consider the material presented as the only source of information available when making investment decisions. Investors are asked to reference all public information regarding featured companies prior to making any investment decision. Investing in stocks can result in the loss of an entire investment. Stocks trading on OTC markets have more volatility than those that trade on major exchanges. Investors should consider all risks associated in purchasing OTC stocks and understand they may lose all of their money when investing in any stock.
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