Debenhams Group (LSE:DEBS) reported significant progress in its transformation programme, with adjusted EBITDA increasing 34.6% to £53.3 million despite declines in both revenue and gross merchandise value (GMV). Group GMV fell 21.6% while revenue decreased 24.7%, reflecting the company’s continued transition towards a higher-margin marketplace-led business model.
Management said the results demonstrate the benefits of prioritising profitability and operational efficiency over top-line growth as the business reshapes its operating structure.
Debenhams Brand Emerges as Key Growth Driver
The Debenhams brand became the group’s largest business during the year, delivering GMV growth of 11.6% to £730 million. Adjusted EBITDA from the brand increased 38.5% to £34.8 million, highlighting the strength of its marketplace model and expanding product offering.
Across the wider portfolio, all brands achieved profitability at the adjusted EBITDA level. PrettyLittleThing recorded one of the most notable improvements, moving from a loss in the previous year to an adjusted EBITDA profit of £14 million.
Restructuring Programme Delivers Cost Savings
Operational simplification remained a major focus throughout the year. The company consolidated warehouse operations into its Sheffield facility, integrated multiple technology systems into a single AI-powered platform and renegotiated a range of supplier and service contracts.
These initiatives generated recurring cost savings worth tens of millions of pounds and contributed to a substantial reduction in exceptional costs compared with previous periods.
Early Signs of Recovery in FY27
Although the group continued to report a statutory loss after tax of £108.3 million and negative free cash flow, management highlighted significant progress in reducing losses and strengthening the balance sheet. Leverage stood at 1.75 times adjusted EBITDA following new financing arrangements and equity funding during the year.
The company also reported encouraging trading at the start of FY27, with GMV returning to growth. Management believes the business is now positioned to deliver further margin expansion, higher profitability and improved cash generation as its marketplace strategy matures.
Market Considerations
The company’s outlook continues to be affected by the sharp decline in revenue, ongoing statutory losses, elevated leverage and negative operating cash flow. Technical indicators also remain weak, with the share price trading below key moving averages despite some signs of oversold conditions. Valuation support is limited due to the absence of positive earnings and dividend payments.
More About Debenhams Group
Debenhams Group, part of boohoo group plc, operates a portfolio of online fashion, beauty and lifestyle brands serving customers across the UK and international markets. Its brands include Debenhams, PrettyLittleThing, Karen Millen and several youth-focused fashion labels.
The group is focused on a capital-light, stock-light marketplace model, offering a broad range of apparel, beauty and home products through digital channels while seeking to improve profitability and operational efficiency.
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