Debenhams Group said its turnaround strategy is delivering results as it beat profit expectations for 2026 and raised its outlook for the year ahead following last year’s rebrand from Boohoo.

The online fashion retailer expects adjusted EBITDA of £53 million for the year to 28 February 2026, a 36 per cent increase year on year and ahead of prior guidance, driven by a 76 per cent surge in second-half performance. Shares rose more than 6 per cent following the update.

The company said it now anticipates double-digit adjusted EBITDA growth in the 2027 financial year, building on the improved earnings base. Reuters reported that the forecast reflects growing momentum from a restructuring plan focused on reducing costs, cutting debt and shifting towards a marketplace-led model.

Chief executive Dan Finley said the business had made “significant progress” in its transformation, highlighting a pivot to a “stock-lite, capital-lite” approach anchored by the Debenhams brand. He added that major operational changes, including warehouse consolidation and a technology replatform, had been delivered ahead of schedule, with the group now turning its attention to growth.

Trading trends also improved over the year, with gross merchandise value declines easing for three consecutive quarters to 5 per cent year on year by February. The company said all brands in its portfolio are now profitable on an adjusted EBITDA basis.

Cost reduction has been central to the turnaround, with fixed costs falling to £119 million, below earlier guidance of £130 million and down from £175 million the previous year. The group is targeting a further reduction to £100 million in 2027 as efficiencies continue to take hold.

Balance sheet improvements have also supported the outlook, with net debt at £90 million at the end of February, equivalent to less than two times adjusted EBITDA. Reuters reported that a £40 million fundraise in February is expected to help reduce leverage further, with the company targeting net debt below one times EBITDA by 2027.

Wayne Brown, analyst at Panmure Liberum, told Reuters that “the transformation work done has been huge and the noise (and costs) associated with these is now all but over,” adding that “all the signals and green shoots of the new business model are now visible.”

The company expects cash flow to improve materially in the coming year, supported by lower exceptional costs, reduced lease liabilities and declining capital expenditure as the asset-light model expands.

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