Debenhams proposes new executive pay policy as balance sheet strengthens

In results for the six months to August 31, 2025, the retailer posted a statutory loss after tax of £3.4m, compared to a £126.7m loss year on year. Statutory losses after tax improved 89% to £14.7m for the period.

Gross profit slipped 24% to £157.2m, but adjusted EBITDA improved 5% to £20m, while adjusted EBIT jumped back into the black at £1.8m.

GMV pre returns slipped 19% to £630.8m, while GMV post returns dipped 23% to £406.9m and revenues dropped 23% to £296.9m.

Debenhams Group said net debt during the period was down to £111m, with expected net debt/EBITDA to be reduced by the end of the next financial year to less than two-times the amount as the group “returns to cash generation”.

The retailer said it expects full-year EBITDA to be approximately £45m and that it expects this figure to grow by a double-digit percentage in the 2027 financial year.

The board said its improving results show Debenhams is valued “well below” what it should be, and said it will “continue to engage with investors to ensure the new Debenhams business model is fully understood and will recommence our investor roadshows”.

Chief executive Dan Finley said: “Our turnaround is gathering real pace. We are making progress, we are moving fast, and we are transforming the business. We have returned all our brands to profitability and grown adjusted EBITDA. These results show that our strategy is working.

“We built this turnaround on three clear pillars: creating the right operating model, supercharging Debenhams, and pivoting our other brands into fashion-led marketplaces. We have simplified, we have focused, we are staying disciplined in how we execute, and we know there is more to do.

“Debenhams is leading the way. Its double-digit growth shows what is possible across the wider Group and reinforces that the marketplace model is the right one. Our Youth Brands and Karen Millen are following that lead, now fully marketplace-enabled and profitable, with the foundations in place for their next phase of growth.

“This is a multi-year journey, and we have a clear plan and the right model in place. We are transforming into a lean, tech-enabled, best-in-class online platform business. The momentum we have built in the first half sets us up well for the remainder of FY26 and we expect Adjusted EBITDA to be ahead of last year.”

New executive pay scheme

As a result of all this, the retailer today also proposed a new incentive scheme for Debenhams executives, such as chief executive Dan Finley and chief financial officer Phil Ellis, based on the continued turnaround of the business.

Called the Group Turnaround Scheme (GTS), Debenhams said the new scheme is “designed to be a strong incentive for the executives and certain other members of the senior management team to execute the turnaround strategy over the coming years and consequently restore profitability and unlock value for all shareholders”.

The new scheme will give executives an aggregated 6% share of any Debenhams growth in the market capitalisation and is subject to three measurement dates: the first in three years from today’s date, then again at four years and another at five.

From those dates, the price will be determined by reference to the trailing 30-day average closing share price and executive will then be entitled to receive the growth in the market capitalisation.

To achieve the full potential bonus, Debenhams Group will have to reach a £4.2bn market capitalisation by the fifth year. The retailer noted that Boohoo founder Mahmud Kamani will not participate in the new scheme.

The board said that despite having sought shareholder support for previous changes to management incentive schemes since 2020, it would be adopting the new proposals without seeking shareholder support this time around.

It gave a number of reasons for this, most notably that a “major competitor who is a significant shareholder of Debenhams continues to seek to disrupt the Debenhams Group’s growth strategy and operations rather than maximise its future success”.