Debenhams earnings rise as Boohoo owner continues turnaround

The retailer, which also owns Pretty Little Thing, said it expects earnings to continue to improve

Online retail group Debenhams has announced a return to earnings profits for the past six months as trading gathered strength.

The retailer, which also owns the Boohoo and Pretty Little Thing brands, said it anticipates earnings will continue to strengthen following cost-cutting measures as it pushes ahead with its turnaround strategy.

Boss Dan Finley said: “Our turnaround continues at pace.

“This is a strong first half and, importantly, one where growth accelerated as we went through it.”

Debenhams informed shareholders that gross merchandise value (GMV), the group’s preferred sales measure, rose by 1.8% in the six months to 31 August, compared with a year earlier.

It confirmed that growth of 0.5% in the first quarter picked up pace to 2.9% in the latest quarter.

The performance was particularly buoyed by the Debenhams brand, which posted a 14.1% sales uplift, while Pretty Little Thing, Boohoo and Karen Millen all moved back into growth territory.

The retail firm also disclosed reported earnings before interest, tax, depreciation and amortisation (EBITDA) of £20 million for the half-year, reversing a £3 million earnings loss from a year earlier.

It attributed this to an 83.5% drop in exceptional costs to £4 million.

Management said they anticipate a “continued material improvement” in earnings and a return to profitability for the year.

Debenhams confirmed it remains on course with plans to deliver £100 million in cost savings by next year. The group also revealed its ambition to bring down its net debt from £102 million to “negligible” levels following a series of asset disposals in recent weeks.

On Tuesday, Debenhams announced the sale of women’s fashion label Nasty Gal to WSG brands for 16 million US dollars (£11.9 million).

This followed the company’s announcement the previous week of the sale of its Sheffield warehouse to Primark for £90 million, with the retail giant intending to use the facility to support home deliveries.

Mr Finley added: “With the cost programme ahead of plan, lease costs falling and net debt down year on year, we are reiterating our guidance of double-digit adjusted EBITDA growth and free cash flow in full-year 2027.

“Since the half-year end, the Sheffield distribution centre and Nasty Gal disposals mark a further significant step in reducing leverage, and we now expect net debt to be negligible at our February 2027 year end.”