UK online retailer Debenhams sees interim profit growth amid turnaround

(Reuters) -British online fashion retailer Debenhams Group on Tuesday said it expects first-half core earnings to exceed year-ago levels amid a turnaround strategy to reverse costs pressures and revive demand, sending shares as much as 9% higher.

The company rebranded in March to Debenhams from Boohoo, following a turbulent period marked by leadership changes, a strategic review, competitive pressures and a dispute with Mike Ashley-owned Frasers Group, its top shareholder.

All of Debenhams' brands are now trading profitably in terms of adjusted earnings before interest, taxes, depreciation and amortisation, it said in a statement.

The group operates brands including Debenhams, Karen Millen, boohoo, MAN and PLT. Shares of the company pared gains by 1435 GMT but were still trading up 1.5% at 15.36 pence apiece.

Debenhams said it was also exploring a potential sale of its PLT brand and long-term options for its distribution sites in the U.S. and Burnley, England.

Consumer spending in the UK has been mixed amid high inflation and changing weather, and increased competition from lower cost Chinese-founded fast fashion groups Shein and Temu are also pressuring demand at the retailer.

But under CEO Dan Finley, who took over as Debenhams' top boss last November, the group has delivered 50 million pounds ($67.6 million) in annualised savings, which included a 30% headcount reduction, Debenhams said on Tuesday. 

Excluding PLT, core earnings for the year ended February 28, 2025 stood at 41.6 million pounds, compared with 40.4 million pounds a year earlier, it added.

Revenue fell 12% to 790.3 million pounds, it said, mainly reflecting a shift toward a marketplace model, where only commissions are recognised for facilitating transactions between third-party sellers and buyers.

Debenhams said it is also investing in new products to provide third party brands new revenue streams.  

($1 = 0.7402 pounds)

(Reporting by Raechel Thankam Job in Bengaluru; Editing by Shilpi Majumdar and Alistair Bell)