The owner of Boohoo and Debenhams has said it is on track for better-than-expected annual earnings, and hiked its guidance for the year to next February as its turnaround gathers steam.
Debenhams Group, which was renamed from Boohoo last year, said it now expects underlying earnings to rise by 36% to £53 million for the year to February 28, with the better-than-forecast performance thanks to a 76% surge in the final six months.
It had previously guided for underlying profits of £50 million.
The firm, which also runs brands including Karen Millen, said it now sees double-digit underlying earnings growth in the 2026-27 financial year as sales declines continue to improve.
Sales falls by gross merchandise value narrowed to 5% in the three months to the end of February.
Chief executive Dan Finley said: “Our multi-year turnaround strategy continues at pace.”
He hailed “significant progress” in its overhaul, but added “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.