Debenhams shares jump as turnaround gains pace
Shares in Debenhams bounced on Monday as the fashion giant reported better-than-expected performance as it said it is making “significant progress” on its turnaround.
Debenhams Group, which was renamed from Boohoo last year, said its underlying earnings grew by 76 per cent in the last six months after the retailer slashed costs and revamped its tech.
The company’s share price rose as much as nine per cent on Monday’s market open, before sticking at a six per cent increase to 18.5p – though the stock remains down nearly 20 per cent in the year so far.
The AIM-listed fashion group had been struggling in recent years as analysts said it was struggling to convert from a high-street retailer into an online operator.
Debenhams said on Monday it is set to take £53m in underlying earnings in the year to February 2026, marking a 36 per cent year-on-year increase.
Each of the group’s brands – which include Boohoo, Pretty Little Thing and Karen Millen – are trading profitably, the firm said.
Debenhams Group slashes costs
The group’s turnaround has been driven by slashing “most of [its] onerous costs,” the board said, noting that Debenhams is moving towards an “asset-lite model”.
Dan Finley, the group’s chief executive, said: “Our multi-year turnaround strategy continues at pace. The cost base has been reset, the warehouse consolidation completed, the tech re-platform delivered, the stock base rightsized, most of the onerous costs exited and the brand management teams strengthened.
“This is significant progress, ahead of our plan, but there is still more to be delivered and we now focus on growth.”
The group’s shares plummeted as much as 20 per cent in February when it announced an equity raise, though the scheme took £40m – exceeding the initial target.
Debenhams’ board positioned the equity raise as central to reshaping the group’s fortunes, while a non-executive director quit following the scheme, describing the company as “undervalued” by its market value.
This equity raise helped the group to cut its debt and interest costs, the board said, with net debt down to £90m in February.
Wayne Brown, research analyst at Panmure Liberum, noted this forecast upgrade is the group’s third this year.
He said: “The transformation work done has been huge and the noise (and costs) associated with these is now all but over.
“Some may say it is too early to call, but all the signals and green shoots of the new business model are now visible and when investors start to recognise this, the shares will rally very hard.”