Debenhams CEO hails ‘successful transformation’ as Boohoo group losses narrow

Fashion firm which also owns Pretty Little Thing and Karen Millen is reinventing itself from a high-street retailer into an online marketplace operator

The owner of Debenhams has heralded a “successful transformation” following its dramatic turnaround, although the fast-fashion group still recorded a £100m loss.

The AIM-listed group, whose portfolio includes brands such as Debenhams, Pretty Little Thing and Karen Millen, saw its pre-tax loss narrow by 69 per cent to £108m in the year to February.

The fashion firm, which trades as Boohoo, has been pursuing a radical transformation as it seeks to halt substantial losses and reinvent itself from a high-street retailer into an online operator.

While Debenhams Group saw revenue decline by 25 per cent to £917m, the firm explained this is because it has “deliberately” shifted to a higher-margin marketplace model, whereby income from commission, rather than the full transaction value, is recorded as revenue.

Its share price dropped by two per cent to 24.5p at Tuesday’s market open, although the stock has risen 42 per cent over the past month, as reported by City AM.

The listed business saw gross margin rise by 0.4 per cent to 51.1 per cent, representing the first improvement since 2022. The group said it is recording a higher volume of 100 per cent margin sales.

Chief executive Dan Finley said each of the group’s brands is now profitable on an adjusted earnings basis, celebrating a “year of significant and successful transformation”.

Billionaire fast-fashion tycoon Mike Ashley’s Frasers Group holds a 29 per cent stake in Debenhams Group and, in 2024, launched an unsuccessful attempt to secure a seat on its board. Finley’s restructuring strategy has featured an aggressive cost-reduction programme, and Debenhams announced on Tuesday that it is on course to deliver a further £100m in savings in the year ahead, taking total reductions under the new leadership to £200m.

The company highlighted that the Debenhams brand “sits at the centre of the group going forward,” with its marketplace model having been introduced in Ireland, Australia and the US this year.

Finley, who assumed control in November 2024, said: “The cost base has been reset, warehouse consolidation completed, the tech re-platform delivered, stock rightsized, and onerous costs exited. The turnaround is firmly on track.”

Debenhams Group said it anticipates improving its margins and further reducing its statutory loss in the forthcoming financial year.

The group received praise from analysts last week when it revealed the sublease of its US distribution centre, which Finley characterised as “a major contributor to the challenges that the company has faced”.

Analysts at Zeus described Debenhams as having delivered a “year of decisive transformation”.

The transition to a marketplace model “masks” the fashion retailer’s topline gains, alongside improvements to profitability, cash conversion and balance-sheet strength, they noted.

The analysts suggested that the fashion business “remains fundamentally undervalued, but this should continue to correct” if its management achieves double-digit earnings growth. Wayne Brown, an analyst at Panmure Liberum, hailed Debenhams Group as “one stock that is marching forward and delivering on everything they have said they would”.