Debenhams is Back
This announcement contains inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended).
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For Immediate Release |
11 March 2025 |
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boohoo group plc
("boohoo" or the "Group")
Debenhams is back
· Successful multi-year turnaround of Debenhams now completed; reinvigorated business now majority contributor to Group profitability
· New Debenhams business model and economics proven
· Turnaround of Debenhams provides blueprint for wider group turnaround
· Group will pivot to marketplace model to drive growth, profitability and cash generation
· Business will be rebranded and will now go forward as Debenhams Group
· Trading update
· Appointment of new CFO
Overview
Debenhams is back. The business has been successfully turned around since it was acquired out of administration in 2021.
It has been repositioned as Britain's online department store and is underpinned by a new marketplace led business model.
Debenhams is growing rapidly. The business model is stock-lite and capital-lite. It is very profitable and highly cash generative.
For our consumers, Debenhams is once again becoming their destination of choice. It is an iconic British heritage brand with huge brand awareness and significant consumer trust.
For our partners, Debenhams is becoming a partner of choice, providing access to millions of consumers and driving strong growth for those selling on the Debenhams platform.
The Group sees significant future growth opportunities for Debenhams with a medium-term ambition to create a £multi-billion GMV[1] business with a target c.20% EBITDA margin (on a net sales basis).
Our ongoing business review has confirmed that Debenhams, its business model and its technology is at the epicentre of our Group going forward. It is the driving force of the business and will lead the Group recovery. It is at the heart of the investment case.
The successful Debenhams turnaround, led by Dan Finley, Group Chief Executive Officer, provides the blueprint for the wider turnaround of the Group.
The Debenhams marketplace-led business model, proprietary technology and lean operating model will be extended across the Group. This is critical to the turnaround of the youth brands and will help accelerate value creation in Karen Millen.
Reflective of this major strategic change, the Group will go forward as Debenhams Group with immediate effect.
Debenhams Group is sharply focused on maximising value for all shareholders. It will be at the forefront of global digital retail. It will be a leaner, faster and more technologically advanced business - utilising next-generation technology to maximum effect. The Group will be underpinned by a new ESG strategy.
Concurrent with today's strategic announcement, the Group has published a trading update, which is set out below.
There will be an online presentation for analysts, investors and media, that will showcase the Debenhams growth story at 9am today. To view, please follow the link: https://stream.brrmedia.co.uk/broadcast/67c858cbbb5d310d65788a1a
Becoming Debenhams Group
Debenhams is back - Britain's leading online department store:
o Under the leadership of Dan Finley, now Group CEO, Debenhams has been transformed. Bought out of administration, Debenhams is now fast-growing and highly profitable, generating GMV of £654 m and net sales of £205m, with a c.12% EBITDA margin (on a net sales basis)
o Debenhams has a stock-lite, capital-lite and highly cash generative business model
o Today Debenhams has a community of c.15k brands across fashion, beauty and home
o Debenhams is also the home for the Group-owned labels, including Wallis, Burton, MissPap, Coast, Oasis, Dorothy Perkins and Warehouse, which have now been turned around and which combined have a c.7% EBITDA margin
o We see a clear runway to Debenhams becoming a business in the medium term with a £multi-billion GMV and an EBITDA margin on net sales of c.20%
Youth brands in turnaround
In PLT, boohoo and MAN, the Group has three highly relevant online retail brands that between them have GMV for FY25 of more than £1.5bn, serve approximately 15m customers and a social media reach of c.50m. Whilst recent trading has been tough for Youth Brands as we right-size stock levels by discounting heavily and realign market spend, the Group believes there is future potential in these brands by pivoting them to be fashion-led marketplaces and by investing to strengthen the consumer proposition. We believe this will enhance the consumer experience, increase the Group's share of wallet and reduce future stockholding requirements. This will be underpinned by the leaner Debenhams operating model, which will drive higher profitability and cash generation.
Whilst we recognise that this turnaround will take time and that we have a period of substantial change ahead of us, we remain excited about the potential of these brands. Work is underway. We have addressed legacy stock issues and significantly reduced their operating costs. On boohoo, we have created a community of over 1,400 brands, which grows every day and we are pleased with the traction this is gaining with our consumer.
The business review remains ongoing and a further update will be provided with our full year results.
Driving Karen Millen globally
Karen Millen has been transformed into a digital first, premium global brand with a FY25 GMV of £157m. The future growth potential is significant as it evolves into a premium lifestyle destination, accelerated through marketplace (including pre-loved luxury), licensing and international expansion.
Group approach
Going forward as Debenhams Group is reflective of the new strategic direction, leadership change and the major transformation that is being undertaken.
It will strengthen brand recognition and trust, leveraging the well-established and iconic Debenhams name; enhance supplier and partner relationships; drive alignment behind the multi-brand marketplace strategy; unite colleagues; and support the Group's ambitious growth plans.
This will be underpinned by our new ESG strategy. As part of that, today the Group is announcing four new partnerships:
· With Segura, a global leader in supply chain visibility, to deliver transparency in our end to end supply chain
· Working with the Carbon Trust to turn our environmental ambitions into impact through the development of a robust Net Zero Transition plan
· With Pennies, the UK's leading micro-donation tech charity, to drive positive social change
· With the Graduate Fashion Foundation to invest in and develop future fashion talent
The Group will now accelerate its transition to the Debenhams led business and operating model.
In recent months, the Group has acted decisively to reposition itself. The US distribution centre has been closed. A successful equity raise was completed. The London office was sold. £50m of annualised head office headcount cost savings have been delivered. The cost base is under continuous review.
The Group will update further at its Full Year results.
Trading Update for the Full Year to February 2025
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£m |
FY 25 |
H2 25 |
H1 25 |
FY 24 |
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Group GMV pre returns |
2,321.8 |
1,141.1 |
1,180.6 |
2,581.4 |
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Debenhams |
654.0 |
384.0 |
270.0 |
488.7 |
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Karen Millen |
157.1 |
79.2 |
78.0 |
161.9 |
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Youth Brands |
1,510.6 |
678.0 |
832.6 |
1,930.8 |
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Group GMV post returns |
1,639.0 |
838.3 |
800.7 |
1,784.7 |
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Revenue - Group |
1,220.3 |
600.5 |
619.8 |
1,461.1 |
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Debenhams |
204.6 |
123.3 |
81.2 |
186.0 |
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Karen Millen |
68.4 |
36.4 |
32.0 |
70.1 |
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Youth Brands |
947.3 |
440.8 |
506.6 |
1,204.9 |
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Net debt |
82.7 |
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143.1 |
95.0 |
Group GMV pre returns was down 10% year on year, in spite of the very strong Debenhams performance. Revenue was £1,220.3m, down 16% year on year. The Group expects to report adjusted EBITDA for FY25 of around £40m.
Exceptional one-off costs in FY25 will include those related to the closure of the US distribution centre, redundancy costs associated with headcount reduction and a one-off non-cash cost of c.£40m for the write down of surplus stock in the Youth Brands.
Outlook
Whilst we continue to invest in the Youth Brands in the short term as part of their turnaround, we are raising our medium term guidance for Debenhams to EBITDA margins of c.20%. Medium term targets for Karen Millen and the Youth Brands remain unchanged, with double digit EBITDA margins for Karen Millen and 6-8% EBITDA margins for the Youth Brands.
Appointment of new CFO and directorate change
Reflective of this new strategy and the acceleration of the Group to the Debenhams led business and operating model, the Group announces that Phil Ellis will become Group CFO and a member of the board, replacing Stephen Morana with immediate effect.
Phil is currently Finance Director of Debenhams and Managing Director of DebenhamsPay+. He has worked for the Group CEO, Dan Finley for 6+ years.
Phil has extensive commercial finance experience in the retail industry and joined the Group in 2022 as Finance Director of Debenhams, immediately prior to that he held senior financial roles at JD Sports for 6 years, and 7 years at The Very Group.
Stephen will oversee the finalisation of our FY25 results and completion of the audit, as part of an orderly and planned transition.
Further information required by Schedule 2(g) of the AIM Rules for Companies is included at the end of this announcement.
Notice of General Meeting
Debenhams Group will operate under the name of Debenhams Group with immediate effect.
The formal name change of the company entity requires a shareholder vote at a General Meeting. The notice convening the General Meeting is expected to be sent to shareholders on 12 March 2025, with the meeting scheduled to take place on 28 March 2025 at 10.00am at Addleshaw Goddard, 1 St. Peters Square, Manchester M2 3DE.
Appointment of joint broker
The Group is pleased to announce the appointment of Panmure Liberum Limited ("Panmure Liberum") as its joint corporate broker with immediate effect. Panmure Liberum will work alongside Zeus Capital, the Group's existing corporate broker and nominated adviser.
Dan Finley, Group Chief Executive Officer, said:
"Debenhams is back. The iconic British heritage brand, bought out of administration, has been successfully turned around. Rebuilt for the future and transformed into Britain's leading online department store.
"We've created a thriving community of brand partners with millions of consumers and we are growing rapidly. The most exciting thing is that we are just getting started. We see a clear path to scaling this into a £multibillion GMV business with strong profitability.
"The successful turnaround of Debenhams is our blueprint for the wider turnaround of the Group. The turnaround of our Youth Brands is underway and will take time. I have inherited significant challenges. I can see their future potential as they evolve into fashion-led marketplaces and adopt a leaner operating model
"We go forward as Debenhams Group. This is a defining moment in our journey, reflective of our new strategy, new leadership and new beginnings.
"Debenhams Group is sharply focused on maximising value for all shareholders. It will be at the forefront of global digital retail. It will be a leaner, faster and more technologically advanced business. I am confident our best days are ahead of us and I am excited for our future.
"Finally, I am delighted to promote Phil to CFO of Debenhams Group. We've worked closely together for 6 years. Phil has played a key role in the turnaround and growth of Debenhams. Phil's retail, marketplace, financial services and turnaround experience are what we need. I'd like to thank Stephen for his significant contribution in a challenging period. The board and I wish him well for the future."
There will be an online presentation for analysts, investors and media, that will showcase the Debenhams growth story at 9am today. To view, please follow the link: https://stream.brrmedia.co.uk/broadcast/67c858cbbb5d310d65788a1a
Further information on new CFO
In accordance with Schedule 2(g) of the AIM Rules for Companies, Philip Jonathan Ellis, aged 50, holds, or has held in the past five years, the following directorships and partnerships:
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Current directorships or partnerships |
Directorships or partnerships held in last 5 years |
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Debenhamspayplus Limited |
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Phil holds no shares in the Company. He has been granted nil-paid options over a total of 500,000 shares in boohoo Group plc which he received as an employee of the Group, before his appointment to CFO.
There is no further information on Phil Ellis required to be disclosed under Schedule Two, paragraph (g) of the AIM Rules for Companies.
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Enquiries |
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Debenhams Group |
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Phil Ellis, Chief Financial Officer |
Tel: +44 (0)161 233 2050 |
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Victoria Huxster, Head of Investor Relations |
Tel: +44 (0)161 233 2050 |
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Zeus Capital - Nominated adviser and joint broker |
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Nick Cowles / Dan Bate / James Edis |
Tel: +44 (0)161 831 1512 |
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Benjamin Robertson |
Tel: +44 (0)20 3829 5000 |
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Panmure Liberum - Joint Broker Max Jones / Ailsa MacMaster / Gaya Bhatt
Headland - Financial PR adviser |
Tel: +44 (0)20 3100 2000 |
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Susanna Voyle / Will Smith |
Tel: +44 (0)20 3725 7514 |
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About Debenhams Group
Debenhams Group is an online powerhouse in fashion, home, and beauty, serving millions of customers across five shopping destinations: Debenhams, Karen Millen, boohoo, MAN and PLT.
Debenhams Group dates back to 1778 when William Clark, a retail pioneer of the time, opened the UK's first department store. Today, the Group is home to Debenhams-which was relaunched in 2021 as an online department store-and leading online fashion retailers, including boohoo, PLT, MAN, and Karen Millen.
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