Debenhams Group (LSE:DEBS) said it expects Adjusted EBITDA of £53 million for the year to 28 February 2026, representing a 36% increase and exceeding previous guidance. The improvement was driven largely by a strong second half, where performance rose 76% year-on-year. The company noted that all brands within the group are now profitable on an Adjusted EBITDA basis, while gross merchandise value trends have strengthened over three consecutive quarters, finishing February around 5% below the prior year.
Management pointed to significant progress in its multi-year turnaround strategy, which focuses on transitioning the business to a stock-light, asset-light online marketplace model while reducing operating costs. Fixed costs have been cut from £175 million to an exit run-rate of £119 million, while capital expenditure has nearly halved. Lease and interest expenses are also expected to decline further as the company continues to exit non-core assets and reduce leverage.
At the end of the financial year, net debt stood at £90 million following a £40 million capital raise, bringing leverage to below two times Adjusted EBITDA. The company now expects leverage to fall below one times EBITDA by FY27. Management also anticipates stronger free cash flow as exceptional restructuring costs decline, depreciation falls in line with a smaller asset base and marketplace growth improves working capital efficiency.
Reflecting these improvements, the board has raised its outlook for FY27 and now expects double-digit Adjusted EBITDA growth from the new £53 million base. Directors said the restructured cost base, consolidation of warehouse operations, technology platform upgrades and strengthened brand management position the group to return its brands to growth and reinforce its competitive standing as an asset-light online marketplace operator.
Despite operational improvements, the company’s broader outlook remains influenced by weaker financial metrics including declining revenue, ongoing losses, relatively high leverage and negative operating cash flow. Technical indicators also remain bearish, with the share price trading below key moving averages despite oversold signals. Valuation metrics offer limited support given the negative price-to-earnings ratio and the absence of dividend yield data.
More about Debenhams Group
Debenhams Group, part of boohoo group plc, operates an online retail platform specialising in fashion, home and beauty products. The business serves millions of customers through five main online shopping destinations: Debenhams, Karen Millen, boohoo, MAN and PrettyLittleThing. Originally known as a department store chain, the Debenhams brand has been transformed into a digital marketplace model aimed at UK and international consumers.
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