Boohoo Group gets big boost from Debenhams marketplace in H1 as losses shrink

Boohoo Group/Debenhams released its results for the half to the end of August on Thursday and had much better news to share than it’s had in recent years.

The company said its “turnaround continues apace” with a “return to profitability across all brands”.

That’s undeniably good news for a company that spent its early years as a star of the UK fashion e-tail sector but that has faced massive challenges since the pandemic/post-pandemic online boom came to a halt.

The company said its turnaround is “well under way” and the Debenhams brand it acquired earlier this decade is continuing to grow with H126 general merchandise value (GMV) up 20% while EBITDA there was up 50%. 

So let’s look at the overall figures for the period and the first thing to note is that it wasn’t all about positives and the business is still loss-making. 

Total company GMV pre-returns fell 19% to £630.8 million. At the Youth Brands, it was down 41% at £258 million while at Karen Millen it fell 31% to £54 million. As mentioned, the Debenhams brand was up 20% at £318.8 million.

GMV post-returns was down 23% at £406.9 million while revenue fell 23% to £296.9 million. Gross profit dropped 24% to £157.2 million and the gross margin fell to 52.9% from 53.5%.

But the revenue number isn’t quite as bad as it looks on the surface. That 23% revenue decline was “consistent with the increasing mix of marketplace activity where only commission income is recognised”.

The company’s operating costs also narrowed by 27%, which was a definite plus point, while adjusted EBITDA increases 5% to £20 million.

The business remained loss-making on a statutory basis but its losses narrowed sharply. For instance the statutory loss after tax shrank by 97% from £126.7 million to a loss of just £3.4 million. And net debt was down to £111 million from £143 million.

As for the rest of the year and next year, the company said it expects FY26 EBITDA to be approximately £45 million for total operations and this is expected to grow by a double-digit percentage in FY27. 

Renewed confidence

The company is obviously feeling a lot more confident that it was just a year or so ago, and it also said it thinks its market value — based on its share price — is “well below intrinsic value” and it will restart its investor roadshows to get its message across. That message clearly got across to investors on Thursday morning with the share price jumping over 20% in early trading.

The group also said it’s addressing the anomaly where it calls itself Debenhams but its official name remains Boohoo Group. That happened because major shareholder Frasers Group had voted to block the official name change. It said it “will formally change the name of Boohoo Group Plc to Debenhams Plc, as we previously tried, as soon as all major shareholders agree, as we believe that is in the best interest of all shareholders”.

Looking at the past six months’ performance in more detail, the company said its marketplace model “is at the heart of our go forward business. It is stock lite, capital lite, margin rich and highly cash generative. This will improve further as we continue to grow our take rate and realise the potential of our recent AI investments across the business”.

It now has around 20,000 partners in its ecosystem, double the number of a year ago, and sees “significant further partner growth potential. All our group brands are now marketplace enabled, leveraging our proprietary technology ecosystem”.

And it added that as it approaches the five-year anniversary of the acquisition of Debenhams from administration, it’s clear that it’s “making good progress towards” realising its medium-term multi-billion-pound GMV opportunity with an EBITDA margin around 20%. It also now has a “clear line of sight to the Debenhams brand delivering £1 billion GMV and £50 million+ EBITDA within three years”.

Overall, 32% of GMV is now generated through marketplaces (19% at H125), which is enabling a significant stock-holding reduction.

Debenhams strength

The Debenhams brand is powering ahead and is proving to be a savvy acquisition for the firm. It continues to grow its geographical footprint and expand internationally with Debenhams brand marketplaces now live in Ireland, Australia and the US.

In September, it also launched a number of its brands, including Coast, Warehouse, Oasis, Nasty Gal and Karen Millen, on Macy’s, Bloomingdale’s and Nordstrom online marketplace. Attracting over 350 million shoppers each month, “this marks significant penetration into the US market for the group” and a new collaboration with Amazon Fashion in the US will bring Nasty Gal to over 250 million shoppers on the Amazon platform.

The numbers at the start show that there’s still work to do at its brands outside of Debenhams. Yet it said the significant multi-year transformation of its Youth Brands is under way. All brands are now profitable on an adjusted EBITDA basis with Boohoo, PLT and MAN each having started their own marketplaces. 

Its “focus is on profit and cash generation whilst revenue right-sizes” at the “globally recognised brands” that have over 46.5 million social media followers. Importantly too, their GMV declines “have improved quarter on quarter through the first three quarters of the financial year”. 

And it has a “new energised leadership team in place at Karen Millen. With a new product strategy designed to strengthen brand identity and deliver sustained commercial performance as it transitions to be a premium global lifestyle destination. We see significant global license opportunities across footwear, accessories, home and beauty”.

Group CEO Dan Finley said of all this: “Our turnaround is gathering real pace. We are making progress, we are moving fast, and we are transforming the business. We have returned all our brands to profitability and grown adjusted EBITDA. These results show that our strategy is working.

“We built this turnaround on three clear pillars: creating the right operating model, supercharging Debenhams, and pivoting our other brands into fashion-led marketplaces. We have simplified, we have focused, we are staying disciplined in how we execute, and we know there is more to do.

“This is a multi-year journey, and we have a clear plan and the right model in place. We are transforming into a lean, tech-enabled, best in class online platform business. The momentum we have built in the first half sets us up well for the remainder of FY26 and we expect Adjusted EBITDA to be ahead of last year.”