Online fashion and beauty platform Debenhams (DEBS:AIM) confirmed speculation surrounding a planned £35 million equity fundraise at a discounted 20p per share.
The news sent the stock down 10% to 20.3p in early deals.
Having rebranded from Boohoo last year, Debenhams said the equity will be used to pay down debt. It will also provide increased financial flexibility to pursue a turnaround plan that is ‘going apace’.
| Share price: 20.3p (-10%) | PE: n/a |
| Market cap: £312m | Yield: n/a |
The retailer is also in talks with its lenders to create additional liquidity to support its recovery strategy.
Skin in the game
Key insiders including CEO Dan Finley, founder and chairman Mahmud Kamani and non-executive Iain McDonald plan to participate in the fundraise priced at 20p per share.
The Manchester-based company aims to reduce its net debt-to-adjusted EBITDA ratio to below two times by FY27 through the planned cash injection.
Debenhams is undergoing an eye-catching turnaround under Finley.
This is helping fight off unwelcome attention from retail billionaire Mike Ashley, whose Frasers (FRAS) empire remains a major shareholder.
Double-digit growth
The digital retailer maintained its previously-upgraded FY26 guidance for £50 million in adjusted EBITDA. Furthermore, Debenhams remains ‘confident’ of delivering double-digit adjusted EBITDA growth in FY27.
Debenhams, whose brands include Karen Millen, boohoo and PLT, said the fourth quarter of FY26 has demonstrated material improvements in the group’s gross merchandise value (GMV) trend alongside continued cost reductions as the business is simplified.
While the discounted and dilutive fundraise irked some investors, Finley is delivering an impressive turnaround at Debenhams with costs and debt on a downwards trajectory.
We will continue to monitor the performance of the fast-growing online department store Debenhams, bought from administration some five years ago, as this looks like the real jewel in the crown.
Read the press release here: https://www.debenhamsgroup.com/investors/regulatory-news/
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