Parent of digital-first apparel brands to enter physical retail with 50 stores

Digital Brands Group is moving into physical retail. 

The company, whose portfolio of digital-first lifestyle apparel brands includes Sundry and Bailey 44, plans to open 50 stores during the next several years, which will be funded by its internal cash flow. Digital Brands, whose brands are also distributed wholesale, said it has been reviewing store locations and leases with several large-scale retail developers.

Digital Brands has already signed a letter of intent to open its first store, an outlet location, in March. The company noted it received a significant amount of excess inventory with its acquisition of Sundry (completed in December 2022) and will use the store to clear excess inventory “at a meaningful higher margin” than selling into the off-price channel. 

In addition to driving significant brand awareness, Digital Brands believes its retail stores will result in lower cost customer acquisition and higher average basket size and customer retention.  

"We are excited to announce the retail store phase of our growth strategy,” said Hil Davis, CEO of Digital Brands Group. “We believe the best performing retail brands will have three legs to their growth story: (1) wholesale, (2) e-commerce and (3) retail stores. We believe these stores will also drive revenue in our wholesale and e-commerce channels based on data from other brands who have opened retail stores.”

Digital Brands forecasts that each store will generate more than $1.5 million  in annual revenue, with the fleet of 50 stores generating more than $75 million annually in revenues and “meaningful” store level cash flow.

Digital Brands’ portfolio includes the following brands:

•Bailey 44, a contemporary women’s brand whose on-trend designs specialize in the “date night” category;

•DSTLD, a premium denim brand;

•Harper & Jones, a “made-to-measure” suiting and sportswear brand for men;

•Stateside, a womenswear label crafted with all-natural fabrics; and 

•Sundry, which offers casual wear for the beach or a summer night out.

“We have created a business model derived from our founding as a digitally native-first vertical brand,” the company stated. “We 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.”