Digital Brands Group (DBG), a collection of digital-first luxury lifestyle brands listed on Nasdaq under the ticker symbol DBGI, has revealed its intention to open 50 retail stores in the coming years.

The funding for this ambitious expansion will be sourced from the company's internal free cash flow.

DBG has been actively evaluating potential store locations and negotiating leases with prominent retail developers.

Strategic rationale behind retail expansion

DBG is betting on the belief that these physical retail spaces will play a pivotal role in enhancing brand visibility, reducing customer acquisition costs, and increasing both the average transaction size and customer loyalty.

The company's optimism is grounded in the anticipation that the stores, once operational, are projected to generate an estimated annual revenue exceeding $1.5m per store, demonstrating a positive cash flow at the store level.

Revenue projections and growth strategy

With the expected opening of 50 stores, DBG forecasts an aggregate annual revenue surpassing $75m, along with meaningful store-level cash flow.

The company envisions this retail expansion as a crucial component of its broader growth strategy.

According to Hil Davis, CEO of DBG, the optimal growth trajectory for successful retail brands involves a three-pronged approach encompassing wholesale, e-commerce, and physical retail stores.

DBG is optimistic that the addition of retail stores will not only bolster revenue directly but also have positive spill-over effects on its wholesale and e-commerce channels, drawing insights from the experiences of other brands that have ventured into the retail space.