Debenhams trims losses as transformation gathers pace; PLT sale on the table

Amid an ongoing, company-wide transformation plan, much of which relies on transitioning to a marketplace model, Debenhams Group – formerly Boohoo Group – has seen a marginal improvement in performance for the full-year to February 28, 2025, despite overall sales softening.

The company reported an adjusted EBITDA of 41.6 million pounds, with an improved margin of 5.3 percent, driven by lower distribution costs following warehouse closures among other expenses. Capital expenditure was reduced to 27.5 million pounds.

Adjusted loss before tax narrowed from 49.2 million pounds in 2023 to 43.4 million pounds. On an unadjusted basis, loss came to 263.3 million, up from 146.4 million pounds. Debenhams stated that it had incurred one-off items due to initiatives like closing its US distribution centre and exceptional stock write-offs.

Despite this, group revenue fell 12 percent, from 902.3 million pounds to 790.3 million pounds. The decline reflected “the growing importance of a marketplace model where commission income, rather than full transaction value is recognised”, Debenhams said.

Transition to marketplace model bolsters performance

As part of its wider transformation, the group had indeed begun pivoting its portfolio towards a “the capital-lite, stock lite marketplace model” throughout 2024, catering to an increased consumer demand for more convenient online stores.

The impact of this transition could be seen among its financial performance over the year. While group GMV fell 2 percent year-on-year, the Debenhams brand, which has already long-championed the marketplace model, enjoyed stronger performance, with GMV increasing 34 percent to 645.0 million pounds.

The company’s marketplace nearly doubled its contribution in comparison to last year, representing almost 30 percent of total GMV.

Throughout FY25, Debenhams plans to continue rolling out and extending this setup across its business, with brands like Karen Millen to also soon feature pre-loved luxury, diversifying their product offering. “There is also opportunity for international expansion which remains a strategic priority,” Debenhams noted.

PrettyLittleThing potentially on chopping block

While Debenhams’ ‘Youth Brands’ were said to retain a high relevance among its target audience, PrettyLittleThing (PLT) has found itself at the centre of discourse surrounding a sale. In the group filing, Debenhams said it was actively pursuing a disposal of the e-tailer through a sale process that the board believes is “an opportunity to accelerate progress and maximise shareholder value”.

PLT had marginally impacted performance among the Youth Brands category, the report revealed. GMV including the brand fell 22 percent on the year prior to 1.5 billion pounds. Excluding the retailer, however, GMV dropped 19 percent to 759.6 million pounds.

In light of the poorer performance for this division, Debenhams said it planned to right-size and reposition its Youth Brands, “with a laser focus on profitability and cash generation under new management”. What shape this strategy will take is yet to be publicly determined.

FY26 trading ahead as options for business divisions are mulled

To mitigate impact from other areas of the business, and next to reassessing PLT, the company is also mulling long-term options for its US and Burnley distribution sites to further align with its stock-lite strategy.

The turnaround is being led by Dan Finley, who was appointed CEO of the group in November 2024. While acknowledging the challenging period reflected in the results, Finley said in a statement that the “business is taking necessary actions, quickly and decisively, to address the challenges that we face”.

Performance during the first half of FY26 has seen continued strong and profitable growth of the Debenhams brand, while all other brands are now also trading profitably in adjusted EBITDA, meaning such figures are anticipated to be ahead of FY25 H1.