Debenhams, formerly the Boohoo Group, has announced that it is exploring the possibility of offloading struggling brand PrettyLittleThing to balance its books.
In its audited results for the year ending February 28, 2025, the retailer’s chief executive Dan Finley said: “The business has been through a very challenging period which is reflected in these results” and added that, as part of its “ongoing business review”, Debenhams was “exploring a potential sale” of PLT.
He added that Debenhams was also “assessing long-term options for our US and Burnley distribution sites to enhance efficiency and ensure alignment with our stock-lite strategy”.
Finley’s comments come as the retailer reported deepening pre-tax losses of £263.9m, and a 12% drop in group revenues to £790.3m. Adjusted loss after tax decreased by £5.8m to £43.4m.
GMB increased 34% to £654m, and adjusted EBITDA increased slightly to £41.6m, with margins improving by 80 basis points to 5.3%.
Capital expenditure for the period was £27.5m, “significantly reduced year on year” down from £64.8m while net debt finished the period at £78.2m – compared to £95m at the end of FY24.
Debenhams group chief executive Dan Finley said: “I took on this role on November 1 2024. The board recognised the need for change following a long period of sustained and unacceptable underperformance. My immediate focus has been on stabilising the business and positioning it to take advantage of the significant opportunities ahead. I am laser-focused on maximising value for all shareholders.
“We are pleased to report £41.6m Adjusted EBITDA for FY25. On appointment, this seemed improbable, but we quickly came up with a plan, confirmed our position with the market and executed it. This has only been possible due to the aggressive actions subsequently taken, including £50m of annualised headcount savings. The highlight of the year has been the standout performance of the Debenhams brand, growing GMV to £654m (+34% YOY) and with Adjusted EBITDA of £25m (+ £14m YOY). The Debenhams capital-lite, stock-lite, cost-lite, cash-generative marketplace model sits at the heart of our new strategy. The multi-year turnaround of Debenhams is the blueprint for the turnaround of the wider group.
“We have significantly reduced the capital intensity of the business. We have faced into legacy stock issues and reduced our stock holding by more than 50%. We have stopped unnecessary capital expenditure and reduced capex by more than 50%. Further reductions will be delivered this financial year.
“We have significantly deleveraged the business in H2. Our gross borrowings reduced by £200m, with net debt of £78.2m at year end (1H FY25: £143.1m, FY24 £95.0m). This follows the successful completion of an oversubscribed equity raise of £39m and the sale of non-core property assets, enabling us to pay off our term loan nine months early. Post year end, we announced the successful completion of a new three-year finance facility of up to £175m. This was done more than 12 months ahead of maturity to align our financing to our new strategy.
“The business has been through a very challenging period which is reflected in these results. I want to assure shareholders that the business is taking the necessary actions, quickly and decisively, to address the challenges that we face. No stone will be left unturned.
“As outlined in March, we have a clear plan as Debenhams Group to transform the business and a route map to generating sustainable profit growth. Our mission is to become the shopping destination of choice by connecting our community with the brands they love.
“We are focused on delivering on the huge opportunity ahead for the Debenhams brand. Work is progressing to reposition and right size the Youth Brands, with a laser focus on profitability and cash generation under new management.
“This will be a multi-year turnaround as was the case with the Debenhams brand. As part of our ongoing business review, we are exploring a potential sale of PLT. We are also assessing long-term options for our US and Burnley distribution sites to enhance efficiency and ensure alignment with our stock-lite strategy.
“I am pleased that all our brands are now trading profitably in terms of Adjusted EBITDA. I strongly believe in the medium-term opportunity for our group. We continue forward as Debenhams Group under new leadership, a new strategy, and a new direction.”
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