Boohoo shares surge 24% as loss narrows to £3.4 mln; Debenhams GMV up 20%

Investing.com -- Shares of Boohoo Group (LON:DEBS) jumped over 24% on Thursday after the online fashion retailer narrowed its statutory loss after tax for continuing operations to £3.4 million for the six months ended Aug. 31, down from £126.7 million a year earlier, as it continued its multi-year turnaround and expanded its marketplace model.

The company reported adjusted EBITDA of £20 million, up 5% from £19 million a year earlier, and adjusted EBIT of £1.8 million compared with a £9.2 million loss in the prior-year period. 

Total revenue fell 23% to £296.9 million, which the group said was consistent with its shift toward marketplace sales where commission income is recognized. The group also reported an adjusted EBITDA margin of 6.7%.

Gross margin remained broadly stable at 52.9%. Operating costs decreased 27%, and inventory was reduced by 35% to £68 million as part of a restructuring aimed at moving to a stock-lite and capital-lite model.

Net debt declined to £111.1 million from £143.1 million in the same period last year. Capex fell to £7.5 million compared with £14.9 million in the first half of the prior year. Operating cash outflow improved to £14.7 million from £24 million.

GMV pre-returns for continuing operations declined 19% to £630.8 million. The Youth Brands division fell 41% to £258 million, and Karen Millen declined 31% to £54 million. 

GMV declines in these divisions improved quarter on quarter through the first three quarters of the financial year, the group said.

The Debenhams brand, which the group acquired in 2021, posted a 20% increase in GMV to £318.8 million, and adjusted EBITDA rose 50% compared with the prior-year period. 

Boohoo described Debenhams as providing a framework for the wider turnaround, with 32% of GMV now generated through marketplace channels, up from 19% a year earlier.

Chief executive Dan Finley in a statement 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.” 

He added, “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.”

Exceptional costs before tax were £15.3 million, compared with a credit of £10.5 million a year earlier. 

These costs related to restructuring and closure costs associated with warehouse facilities, dual platform running costs, professional fees and the strategic change announced in October 2024.

Boohoo expects full-year EBITDA of about £45 million and projected a return to single-digit percentage revenue growth in FY27. 

The group said it intends to formally change its name to Debenhams Group, once approved by major shareholders.