Debenhams completes sublease of US distribution centre

Opened as part of a push to establish the Boohoo group in the US in August 2023, the company decided to close the warehouse after 15 months of operation. Fulfilment of US orders then returned to the UK.

The company says rent, operating costs and capital investment at the site has led to costs of $124m (£92.5m).

Debenhams Group, Boohoo’s new trading name, had made it a “strategic priority” to mitigate the group’s liability for the site. ID Logistics is expected to join the warehouse at the start of August and stay in situ until the end of Debenhams’ lease. 

Debenhams Group has 8.5 years remaining on its lease for the US centre, which the company said represents $100m (£74.6m) of future lease and holding costs. ID Logistics will pay an average of $9.5m (£7m) in rent each year under the terms of the sublease. 

The deal will add an unaudited non-cash exceptional credit of around £40m to Debenhams Group’s income statement and be reflected in its results for the first half of the year.

“This is a significant development. The US DC was a major contributor to the challenges that the company has faced. One of my first actions in role was to close the US DC and the sublease of it mitigates a material future liability. Our turnaround strategy continues at pace,” said Debenhams Group chief executive Dan Finley. 

Debenhams Group projects that its lease costs in the current year will be £13m, reducing to £8m the following year and £6m the year after that. 

As well as its Sheffield warehouse and Manchester head office, this includes a “small London footprint”.