UK's Debenhams returns to growth, lifting profits and shares
Debenhams Group Reports Financial Turnaround
June 3 (Reuters) - UK online fashion retailer Debenhams Group returned to growth with a 0.5% rise in first-quarter gross merchandise value along with a "substantial" increase in core profit, it said on Wednesday, lifting the shares over 10%.
Growth Driven by Key Brands
The improvement, with GMV up about 8% in May, was led by the Debenhams and PrettyLittleThing brands but also seen across its Karen Millen and Boohoo brands.
Turnaround Strategy and Operational Changes
Cost Cutting and Marketplace Model
The retailer has been cutting costs and shifting to a marketplace model as part of its turnaround plan to address supply-chain challenges, weak demand and increased competition from low-cost fast fashion.
Profitability and Cashflow Improvements
"That work is now translating into materially improved profitability," CEO Dan Finley said, pointing to a "substantial" increase in adjusted core profit and significantly improved cashflows in the quarter.
Share Performance and Debt Reduction
Share Price Movement
At 0742 GMT the company's shares were up 10.4% at 20.75 pence having fallen over 7% in the last 12 months.
Debt Reduction Initiatives
The retailer said its debt reduction target remains on track through planned disposals of assets including its Burnley property and a U.S. warehouse, alongside improved trading cashflow this year.
Future Outlook
Growth Expectations
It also reaffirmed its expectations for double-digit percentage growth in annual adjusted core profit and free cash flow for fiscal 2027.
Analyst Commentary
Market Sentiment
"The trajectory has been evident for some time now but it’s a major inflection point," said Panmure Liberum analyst Wayne Brown, noting the shares are not reflecting the turnaround.
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Sonia Cheema, Nivedita Bhattacharjee and Elaine Hardcastle)
