Debenhams Group Reports Strong Turnaround: EBITDA Up 35%, All Brands Profitable

Debenhams Group FY26 results: the turnaround is real, but the job is not finished

Debenhams Group, still legally listed as boohoo group plc in the RNS, has delivered a much better set of FY26 numbers than the headline sales decline might suggest. The big message is simple: management has spent the year stripping cost out, shifting the business towards a marketplace model, and dragging every brand back to profitability at Adjusted EBITDA level.

That matters because Adjusted EBITDA, which is profit before interest, tax, depreciation, amortisation and exceptional items, is the company’s preferred measure of underlying trading performance. On that basis, the Group made £53.3 million, up 34.6% year-on-year, while PrettyLittleThing swung from a £1.0 million loss to a £14.0 million profit.

That is a serious operational improvement. It does not mean the business is fully fixed, but it does mean the turnaround story now has hard evidence behind it.

Debenhams Group key numbers: EBITDA up 35%, but revenue and GMV still down

Metric	FY26	FY25	Change
Adjusted EBITDA	£53.3 million	£39.6 million	+34.6%
Revenue	£917.0 million	£1,217.9 million	-24.7%
Group GMV pre returns	£1,820.7 million	£2,321.8 million	-21.6%
Gross margin	51.1%	50.7%	+40bps
Adjusted EBIT	£7.0 million	-£30.5 million	Returned to profit
Loss after tax	£108.3 million	£326.4 million	Improved by £218.1 million
Free cash flow	-£18.4 million	-£40.2 million	Improved
Net debt	£93.2 million	£78.2 million	Higher

The awkward bit is that revenue and GMV, or gross merchandise value, both fell sharply. GMV is basically the total value of goods sold before some accounting adjustments. So no, this is not a clean growth story yet.

But management is being quite open about why revenue is falling. As the Group moves more sales onto its marketplace model, it only books commission as revenue rather than the full value of the product sold. That makes revenue look smaller, but it can make the business more profitable and less capital-intensive.

Why the Debenhams marketplace model is driving profitability

This is the heart of the investment case now. Marketplace mix rose to 34.1% of total GMV from 23.3%, while marketplace GMV increased 14.9% to £620.4 million.

That matters because marketplace sales are recognised at 100% margin at the gross margin line, which helps explain why gross margin improved to 51.1% despite the big sales decline. In plain English, Debenhams is increasingly becoming a platform business rather than a traditional stock-heavy online retailer.

The Debenhams brand itself is doing the heavy lifting. GMV rose 11.6% to £730.0 million and Adjusted EBITDA jumped 38.5% to £34.8 million. It is now the largest brand in the Group and contributed 65.3% of Group Adjusted EBITDA.

That is the clearest positive in the whole announcement. Debenhams is not just surviving inside the old Boohoo structure – it is becoming the blueprint for the rest of the business.

PrettyLittleThing turnaround complete: what the PLT profit swing means

One of the boldest claims in the RNS is that the PLT turnaround is complete. On the numbers provided, that looks fair.

PrettyLittleThing improved from a £1.0 million Adjusted EBITDA loss in FY25 to a £14.0 million profit in FY26, a £15.0 million swing. The Board liked that progress enough to keep PLT within continuing operations rather than sell it.

For retail investors, that matters because PLT had looked like one of the biggest problem children in the group. If management can stabilise PLT while keeping Debenhams growing, the wider strategy starts to look a lot more credible.

Cost cutting at Debenhams Group: £33 million warehouse savings and £38 million tech savings

The other major theme here is cost removal. The Group says it has consolidated all warehouse operations into Sheffield for around £33 million of recurring savings, moved all brands onto a single AI-powered technology platform for around £38 million of annual savings, and renegotiated over 150 contracts for around £35 million of savings.

Operating costs fell 28.2% to £415.4 million. Fixed cost exit rate dropped to £119 million from £175 million in FY25, and management is targeting £100 million in FY27.

That is impressive execution. It also explains why profitability is improving faster than sales. The catch is that a lot of pain came with it, including restructuring, asset impairments and exceptional costs of £68.1 million.

The negatives investors should not ignore: losses, debt and negative equity

This is a much better business than it was a year ago, but it is not yet a pristine one. The Group still made a statutory loss after tax of £108.3 million, even though that was far better than the £326.4 million loss in FY25.

Net debt rose to £93.2 million from £78.2 million. Free cash flow was still negative at £18.4 million. And the balance sheet moved to net liabilities of £57.7 million, compared with net assets of £3.9 million a year earlier.

Those are not small issues. If you are bullish, you would argue they are the messy leftovers of a heavy restructuring year. If you are cautious, you would say the business still has to prove it can convert improving EBITDA into consistent cash generation and a stronger balance sheet.

FY27 outlook: return to growth, lower lease costs and a net debt target below 1x EBITDA

The outlook is encouraging. The Group says Q1 FY27 GMV was up 0.5% year-on-year, May 2026 trading was approximately 8% ahead, and June has continued strongly. That is the first proper sign that this is turning from a rescue job into a growth story.

Management is guiding to a double-digit improvement in FY27 Adjusted EBITDA, with net debt targeted below 1x Adjusted EBITDA by year end. That would be a meaningful deleveraging if delivered.

There is also a useful lease benefit coming through. The completed sublease of the US distribution centre is expected to reduce lease costs from approximately £13 million in FY27 to approximately £8 million in FY28 and approximately £6 million in FY29. It is also expected to create an unaudited non-cash exceptional credit of approximately £40 million in H1 FY27.

That credit is non-cash, so investors should not confuse it with trading profit. Still, it should improve the reported balance sheet and help the Group towards profit before tax.

My take on Debenhams Group FY26 results for retail investors

This RNS is genuinely positive. Not because every number looks pretty – they do not – but because the important ones show the turnaround is working.

Debenhams is growing, PLT is back in profit, costs are down hard, margins are improving, and early FY27 trading has turned positive. That is a much stronger position than this business occupied a year ago.

The caution is that statutory losses remain large, debt is still meaningful, and the balance sheet is still under pressure. So I would call this a strong turnaround update, not a finished recovery.

If management can now deliver what it is promising for FY27 – double-digit Adjusted EBITDA growth, sustained free cash flow generation, and net debt below 1x Adjusted EBITDA – then this starts to look like a transformed business rather than a patched-up one. For now, the direction of travel is clearly better, and that is why this update matters.