Debenhams Group has completed the sublease of its former US distribution centre in Pennsylvania, reducing a “significant” future lease liability as part of its turnaround strategy.
The 1.1 million sq ft facility in Elizabethtown opened in August 2023 and operated for around 15 months before the group ceased operations there in November 2024, returning fulfilment of US orders to the UK.
The company said it has incurred approximately $124m in costs related to the site, including rent, operating expenses and capital investment. With around 8.5 years remaining on the lease, the warehouse represented approximately $100m of future lease and holding costs.
Under the agreement, global third-party logistics provider ID Logistics is expected to take occupation of the site from 1 August 2026 through to the end of the lease term.
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Debenhams Group said the deal materially reduces its future cash obligations and supports its transition to an asset-light operating model.
It is understood the transaction will result in an unaudited non-cash exceptional credit of approximately £40m.
The retailer said annual lease costs will fall to £13m this year, reducing to £8m in FY28 and £6m in FY29 as rental income from the sublease is realised.
Group chief executive Dan Finley said: “This is a significant development. The US DC was a major contributor to the challenges that the company has faced.
“One of my first actions in role was to close the US DC and the sublease of it mitigates a material future liability. Our turnaround strategy continues at pace.”
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