boohoo (LSE:DEBS), in its latest trading update, has revealed that Debenhams returned to growth in the first quarter to 31 May, and the board is confident it will deliver double‑digit percentage growth in full‑year earnings (adjusted EBITDA) in FY27, from the £53m guided for FY26.
Group GMV grew 0.5% year‑on‑year in Q1 with May trading around 8%, led by the Debenhams brand and PrettyLittleThing while Boohoo, BoohooMan and Karen Millen also improved.
The transition to an asset‑light marketplace model is complete, the retailer highlighted, with around c.25k brands and partners now on the group ecosystem.
"Debenhams Group has returned to growth, and Q1 marks the inflexion point we have been working towards," Dan Finley, Group CEO, said.
Gross margin expanded to 53.5% from 52.1% a year earlier, the returns rate declined by c.5% in the quarter and adjusted EBITDA margin "expanded materially", delivering a substantial increase in Adjusted EBITDA in the period.
Exceptional costs fell 72% in Q1 and capital expenditure was down 54% year‑on‑year; capex reduced from £27.5m in FY25 to £16m in FY26 and is expected to be £8m in the current year, while fixed costs are on track to fall to £100m through 2027, a c.£200m cumulative reduction under the new management team.
Net debt to adjusted EBITDA is expected to fall below 1x in the current year through trading cashflow and planned disposals including the Burnley property and the US warehouse, and lease costs will decline to £13m in the current year and to £6m after exiting the US vacant property lease.
Interest costs and exceptional items are also expected to fall materially in the current year, and the Board said it is confident of delivering double‑digit Adjusted EBITDA growth and free cash flow in FY27.
