Shares in Debenhams (LON:DEBS) rallied after the online fashion and beauty retailer reported a 14% jump in H1 adjusted EBITDA to £24 million amid ongoing turnaround progress.
For FY27, the boohoo-to-Karen Millen brands owner expects to deliver a return to positive profit before tax. It also anticipates finishing the year with ‘negligible’ net debt following asset disposals in recent weeks.
H1 earnings surge
Debenhams said momentum accelerated through H1 to 31 August 2026. Gross merchandise value (GMV) grew 1.8% year-on-year. Encouragingly, GMV growth of 0.5% in Q1 accelerated to 2.9% in Q2.
| H1 FY27 | Year-on-year change | |
| GMV Pre Returns (£m) | 864 | +1.8% |
| Adjusted EBITDA (£m) | 24 | +13.9% |
| Gross margin (%) | 53.9% | +200bps |
Source: Debenhams Group, H1 trading update
The Debenhams brand proved a standout performer, delivering GMV growth of 14.1%. Furthermore, the Pretty Little Thing, boohoo and Karen Millen brands all moved back into growth.
During H1, Debenhams’ gross margin expanded to 53.9%, up from 51.9% a year earlier, and the group’s returns rate declined by 4%.
What did the CEO say?
For FY27, Debenhams expects to deliver GMV growth and Adjusted EBITDA of ‘no less than £59 million’. That would represent double-digit year-on-year growth.
CEO Dan Finley said: ‘Our turnaround continues at pace. This is a strong first half and, importantly, one where growth accelerated as we went through it.’
He added: ‘With the cost programme ahead of plan, lease costs falling, and net debt down year-on-year, we are reiterating our guidance of double-digit Adjusted EBITDA growth and free cash flow in FY27.’
Since the half year end, Debenhams has sold its Sheffield distribution centre to Primark for £90 million and the Nasty Gal label to WSG brands for £11.9 million. Finley said these disposals mark a ‘further significant step in reducing leverage, and we now expect net debt to be negligible at our February 2027 year end.’
Hats off to Dan Finley. He has fashioned an impressive turnaround at Debenhams Group. All the core brands are back in growth, the cost base has been rightsized, margins are improving and the balance sheet has been strengthened.
The simplification of the brand portfolio supports the focus on Debenhams and the group’s marketplace model.
And in the medium term, Finley believes the Debenhams brand could become a multi-billion pound GMV business delivering more than £100 million of EBITDA. With Mike Ashley’s Frasers (LON:FRAS) exerting pressure as a major shareholder, Debenhams’ management will be kept on their toes. We expect to see further turnaround progress as a result.
