Digital Brands Group reported third‑quarter 2025 results that showed net revenues of $1.65 million, a 32% decline from $2.44 million in the same period last year, while the company posted a net loss of $3.45 million, or $1.18 per diluted share, compared with a $2.44 million loss in Q3 2024. The decline in revenue is largely attributable to a softer legacy wholesale business, which has been a long‑term headwind for the company’s traditional product lines.
Gross profit fell to $0.71 million, and gross margin contracted to 42.7% from 46.0% year‑ago, reflecting higher fixed‑cost allocations such as warehouse rent, labor, and design personnel. The margin compression underscores the pricing pressure on the wholesale segment and the cost intensity of the company’s current operating model.
Sales and marketing expenses rose to $1.60 million, up more than 100% from $0.70 million in Q3 2024, as the company accelerated marketing spend for its AVO collegiate apparel brand. The AVO program, which has been described by CEO Hil Davis as the “Warby Parker of collegiate apparel,” is the company’s primary growth engine and is expected to drive future revenue upside.
Liquidity improved dramatically, with cash and cash equivalents reaching $12.41 million at September 30, 2025, compared with $289,000 at the end of 2024. Stockholders’ equity turned positive at $15.99 million, reversing a $1.33 million deficit in 2024, thanks to a Series D preferred‑stock financing and warrant exercises that bolstered the balance sheet.
Management highlighted that wholesale revenue had bottomed out and that higher bookings for Spring 2026 wholesale orders are expected to continue. CEO Hil Davis emphasized that the company’s focus on domestic production and a direct‑to‑consumer model positions it to capture a growing share of the Name, Image, and Likeness (NIL) collegiate apparel market. The company’s guidance for the remainder of 2025 remains cautious, but the strategic pivot and improved liquidity signal confidence in a turnaround path.
The market reacted positively, with the stock gaining 2.53% in the four days following the earnings announcement. Investors cited the substantial liquidity boost and the high‑growth potential of the AVO brand as key drivers of the rally, reflecting confidence in the company’s ability to shift from legacy wholesale to a scalable direct‑to‑consumer model.
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