Debenhams Turnaround Progress

Debenhams Group's Multi-Year Turnaround Shows Q1 Traction with GMV Growth and Improved Profitability

Debenhams Group, the rebranded boohoo group, said its multi-year turnaround is gaining traction as first-quarter gross merchandise value rose 0.5% year on year, with May trading particularly strong at about 8% growth. The company pointed to improving profitability and cash generation, including gross margin expanding to 53.5% from 52.1%, a decline in returns, and a material increase in adjusted EBITDA alongside sharply lower exceptional costs. It also reported operational progress such as an about 72% drop in exceptional costs and a 54% reduction in capital expenditure, supporting its goal of moving toward free cash flow. Management described Q1 as an inflection point driven by its shift to an asset-light marketplace model, warehouse consolidation, cost resets, and rebuilding brands on a single platform, reiterating confidence in double-digit adjusted EBITDA growth and positive free cash flow in FY27. The company also outlined plans to cut fixed costs to £100 million by 2027 and reduce leverage to below 1x adjusted EBITDA through trading cashflow, disposals including the Burnley property, and lower capex. Still, some market coverage flags skepticism about the stock and the broader financial profile, even as the turnaround shows early signs of improvement.

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