Debenhams Group has returned to growth in the first quarter of FY27, with the online retail group citing improving performance across its core brands.
The group, formerly known as Boohoo Group, said profitability improved significantly during the three months to 31 May, with gross margin increasing to 53.5% from 52.1% a year earlier
Gross merchandise value (GMV) increased 0.5% year on year in the quarter, with May alone delivering growth of around 8%.
The business continued to reduce costs, with exceptional charges down 72% year on year and capital expenditure falling 54% during the period. Returns rates also fell by around 5%, while adjusted EBITDA margin improved.
Trading was led by the Debenhams and PrettyLittleThing brands, while improvements were also recorded at Boohoo, BoohooMAN and Karen Millen.
Debenhams Group said its transition to an asset-light marketplace model is progressing, with all brands now operating on the marketplace platform and around 25,000 brands and partners joining its ecosystem.
Chief executive Dan Finley described the quarter as an “inflection point” for the business.
“This is the result of the heavy lifting of our multi-year turnaround: the move to an asset light marketplace model, the warehouse consolidation, the cost reset, and the rebuild of every brand on a single proprietary platform,” said Finley.
Looking ahead, the board reiterated guidance for double-digit adjusted EBITDA growth in FY27 and said it remains on track to reduce net debt to adjusted EBITDA to below one times during the year.
Further cost reductions meaures are to be implemented with the board stating Lease costs are forecast to decline, while the group plans to dispose of its Burnley property and US warehouse as part of efforts to reduce leverage.
Click here to sign up to Retail Gazette‘s free daily email newsletter
