Debenhams Group, the company behind Boohoo and the revitalised Debenhams brand, has announced it is on track to exceed its annual earnings expectations, prompting an upward revision of its financial guidance for the year ending February.
The firm’s turnaround strategy appears to be gaining significant traction.
The retail group, which rebranded from Boohoo last year, now anticipates underlying earnings to climb by 36 per cent to £53 million by 28 February.
This improved forecast comes after a robust 76 per cent surge in the final six months, significantly outperforming its previous projection of £50 million.
With other brands like Karen Millen under its umbrella, Debenhams Group also foresees double-digit underlying earnings growth in the 2026-27 financial year, as the rate of sales decline continues to improve, narrowing to just 5 per cent in the three months to the end of February.
Chief executive Dan Finley commented: “Our multi-year turnaround strategy continues at pace.” He acknowledged “significant progress” in the overhaul but added that “there is still more to be delivered and we now focus on growth.”
Debenhams has already secured around £50 million in annual savings and cut its staff headcount by 30% to help transform operations.
In February, it raised £40 million in an investor cash-call to strengthen its balance sheet and cut debt, while its overhaul has also seen it cut property costs by consolidating its warehouse estate and trimming lease expenses, as well as overhauling its tech platform, slashing its stock base and boosting management teams.
It said fixed costs are on track to fall to £100 million in 2026-27, down from £175 million in the previous year.
Net debt fell to £90 million at the end of February, it added.
The retail group is also continuing to explore opportunities to help drive an “asset-lite model”, such as selling parts of the business, supply chain partnerships, strategic intellectual property licensing and other financing options.
Last month, the group halted plans to potentially sell off its PrettyLittleThing brand, but it is yet to reveal which other parts or brands it may be looking to offload.
Plans to slash property costs are set to see lease costs reduce from £18 million in the 2025-26 financial year to around £13 million in 2026-27.
It said this will fall by about a further £6 million when the lease on a vacant US property expires.