Debenhams Group Reports £25.8 Million Pre-Tax Profit in First Half
Key Facts
Debenhams Group announced unaudited results on October 23 for the six months ended August 31, 2026, reporting a statutory post-tax profit of £25.8 million, compared with a loss of £14.7 million in the corresponding period. The company said its adjusted post-tax loss was £2.1 million, compared with an adjusted loss of £13.9 million a year earlier. This means the return to profitability applies to the statutory result, while the adjusted measure remained negative. The company presented the results under the name “Debenhams Group,” while its legal name appears in the announcement heading as boohoo group plc. The figures cover the first half of fiscal 2027.
The result includes a non-cash lease credit of about £40 million related to a sublease agreement for the U.S. distribution centre. The group said both comparison periods included non-cash lease credits; the prior-period credit related to the Daventry site and amounted to £34.3 million. Excluding these credits, the pre-tax loss narrowed from about £52 million in the first half of fiscal 2026 to about £12 million in the latest period. This adjustment puts the statutory earnings in context, as the non-cash credit contributed to the reported result. At the same time, the narrower loss excluding these credits shows an improvement compared with the prior period.
Adjusted earnings before interest, tax, depreciation and amortisation rose 14.6% to £24 million, from £21 million in the first half of fiscal 2026. The reported measure swung to a profit of £19.7 million, after a loss of £3.5 million a year earlier. This coincided with exceptional costs falling to £4.3 million, from £24.5 million in the comparison period. The decline in these items accounts for part of the improvement in the reported result, while the growth in adjusted earnings provides a direct comparison of operating performance between the periods. Management said gross margin expansion and a lower returns rate, alongside growth in gross merchandise value, contributed to the improvement.
Gross merchandise value before returns rose 1.8% to £863.8 million in the first half, with growth accelerating from 0.5% in the first quarter to 2.9% in the second. After taking into account the improved returns rate, gross merchandise value after returns grew 3.7%. But revenue fell 3% to £409.6 million, from £422.4 million a year earlier, while gross profit increased 1% to £221.5 million, compared with £219.3 million. The figures show a divergence between falling revenue and growth in gross profit and gross merchandise value after returns. Management attributed the improvement to growth in gross merchandise value, gross margin expansion and lower returns, as well as a decline in exceptional costs.
Free cash flow swung to an inflow of £5.6 million, after an outflow of £22.1 million in the first half of the previous fiscal year. Net debt fell to £98.5 million on August 31, 2026, compared with £111.1 million in the comparison period. This adds to the picture of improving cash generation alongside growth in operating earnings, while net debt remained at the end of the period. Management also pointed to continued good trading in September and accelerating growth during the month. The group’s fiscal 2027 outlook is tied to growth in gross merchandise value and adjusted operating earnings of at least £59 million.
The group expects to deliver a positive pre-tax profit and generate free cash flow in fiscal 2027, alongside negligible net debt, according to its announcement. It also said its target to reduce fixed costs to £100 million remained on track. Over the medium term, the board is targeting pre-tax profit of more than £100 million. These targets provide a benchmark for tracking the transformation plan after improved cash flow and lower net debt in the first half. The announcement did not specify an additional date for reviewing these targets beyond the stated fiscal period.