Digital Brands Group, Inc. — financial distress indicators
Financial-health summary
Digital Brands Group, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 49/100). The main indicators are losses in each of the last 3 years, revenue collapse and operations consume cash.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Revenue changed -36% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Price is -99% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
Operating margin fell from -14% to -400% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- No material mitigating factors found in the available data.
📰 Recent news scan
- 12 Consumer Discretionary Stocks Moving In Wednesday's After-Market Session - BenzingaGoogle News · 2026-10-07
- DBGI News | DIGITAL BRANDS GROUP INC (NASDAQ:DBGI) - ChartMillGoogle News · 2026-09-26
- $DBGI stock is up 49% today. Here's what we see in our data. - Quiver QuantitativeGoogle News · 2026-09-10
- Digital Brands Group Announces 1-for-40 Reverse Stock Split to Solidify Continued Nasdaq Compliance; Reduces Outstanding Common Stock Float To Approximately 557,000 Shares - Yahoo FinanceGoogle News · 2026-07-17
- Why Small-Cap DBGI Stock Is Soaring Over 35% In Overnight Trading - StocktwitsGoogle News · 2026-06-01
- As College Sports Roils, an Apparel Company Pitches Its Stressed Stock - Sportico.comGoogle News · 2026-05-12
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Digital Brands Group, Inc.'s financial-health indicators show?
As of 2026-10-08, Digital Brands Group, Inc.'s public financial data places it in the 'Watch' band with a distress score of 49/100, driven by losses in each of the last 3 years, revenue collapse and operations consume cash. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Digital Brands Group, Inc.'s financial distress score?
49/100 ('Watch').
What works in Digital Brands Group, Inc.'s favour?
No material mitigating factors were found in the available data.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Consumer Discretionary companies with distress indicators
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- Polestar Automotive Holding UK PLC (PSNYW)Very weak 100/100
- Reborn Coffee, Inc. (REBN)Very weak 100/100
- Sports Entertainment Gaming Global Corporation (SEGG)Very weak 100/100
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.