Debenhams Group (AIM:DEBS), the online fashion retailer formerly known as boohoo (AIM:DEBS), has sold the automation at its Sheffield distribution centre and reassigned the lease to Primark Stores for £90m in cash.
The company received £76.5m on completion, with the remaining £13.5m due early next year once it hands over vacant possession.
The disposal fits Debenhams group's shift toward a marketplace-led model that it describes as capital-lite, stock-lite, cost-lite and cash generative, with an ambition for marketplace sales to exceed half of gross merchandise value (GMV).
Alongside the sale, the group has struck an agreement with a global third-party logistics provider to maintain current fulfilment efficiency for stocked product and to scale its Delivered by Debenhams service beyond fashion.
Management now expects net debt to be negligible by the February 2027 year-end, a marked deleveraging driven by the transaction.
The group also forecasts annual depreciation to fall by roughly £12m, including £3m tied to a right-of-use asset, interest costs to drop by at least £10m, and cash lease costs to decline by about £4m.
"The Debenhams Group turnaround continues at pace, and this transaction helps accelerate our progress," said Dan Finley, Group Chief Executive Officer.
GMV growth, which resumed in the first quarter, accelerated further in the second quarter, according to the company.
Debenhams Group will publish a half-year trading update on 17 September.
News Intelligence what this means for the company
Debenhams Group has sold its Sheffield distribution centre automation and lease to Primark for £90m (£76.5m received on completion, £13.5m deferred), a transaction that management expects will drive net debt to near zero by February 2027 year-end and unlock £12m in annual depreciation savings plus £10m+ in interest cost reductions. The deal accelerates the company's shift to a capital-lite, marketplace-led model and follows a £40m equity raise and new £175m debt facility completed in June; combined with resumed and accelerating GMV growth in Q1–Q2, the company is demonstrating material progress on its turnaround.
- Primark Stores assumes the Sheffield lease and automation, positioning itself as a logistics partner for Debenhams' fulfilment operations under a third-party logistics agreement.
The sale materially de-risks Debenhams' balance sheet ahead of its February 2027 year-end, with net debt targeted at less than 1.0x adjusted EBITDA now expected to reach near-zero levels. Combined with margin expansion (53.5% gross margin in Q1, up from 52.1% a year prior), lower capex run-rate (~£8m planned for the current year versus £27.5m in FY25), and resumed GMV growth, the company is executing its asset-light strategy; the half-year trading update on 17 September will be critical to validate whether operational momentum is sustaining.
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