Debenhams Group has swung back into profit for the first time in five years.
The company, which owns Debenhams, PrettyLittleThing, boohoo and Karen Millen, reported a pre-tax profit of £28.3m for the six months to 31 August, compared with a £17.9m loss a year earlier.
The statutory profit included a non-cash lease credit of around £40m relating to its US distribution centre. Excluding comparable credits in both periods, its pre-tax loss narrowed from approximately £52m to £12m.
Reported EBITDA improved by £23.2m to £19.7m, up from a £3.5m loss last year, while adjusted EBITDA rose 14.6 per cent to £24m.
However, revenue slipped three per cent to £409.6m, despite gross merchandise value rising 1.8 per cent to £863.8m before returns, with growth accelerating from 0.5 per cent in the first quarter to 2.9 per cent in the second.
The Debenhams brand continued to lead the group’s recovery, with GMV jumping 14.1 per cent to £363.8m, accounting for around 42 per cent of the retailer’s total.
PrettyLittleThing and boohoo also returned to growth, with the consolidation of their management teams delivering benefits, while Karen Millen showed signs of improvement.
Meanwhile, MAN’s sales decline continued to slow as the business prioritised profitability.
The group’s marketplace model also gained traction, with marketplace sales reaching a record 38.9 per cent of total GMV, up from 32.7 per cent last year, helping lift gross margins by 2.2 percentage points to 54.1 per cent.
Debenhams Group chief executive Dan Finley said: “The turnaround continues at pace. The Group has returned to GMV growth, gross margins are expanding and returns rates lowering.
“Reported EBITDA has increased over 600 per cent and profit before tax has improved to £28.3m. This is the first time the Group has delivered positive profit before tax since August 2021.
“I am pleased to report that net debt is expected to be negligible at year-end. This is significantly ahead of our original guidance provided at the start of the year. I see material opportunities ahead and we are fully focused on maximising them.”
The retailer’s net debt fell to £98.5m from £111.1m a year earlier, with the group expecting it to reach negligible levels by the end of its financial year following the sale of its Sheffield distribution centre operations and Nasty Gal brand.
The £90m Sheffield deal completed in September, alongside the £11.9m disposal of Nasty Gal, is expected to significantly strengthen its balance sheet.
The group has also appointed GXO as its new global logistics partner, with plans to transfer fulfilment operations from Sheffield to Burnley after the peak Christmas trading period.
Looking ahead, Debenhams Group said trading remained strong in September, with sales growth accelerating further.
It maintained its full-year guidance for adjusted EBITDA of at least £59m, alongside positive pre-tax profit, free cash flow generation and negligible net debt.
It also reiterated its target to remove £100m of fixed costs from the business.
In the medium term, the group is targeting more than £100m in annual pre-tax profit as it continues to shift towards a marketplace-led business model.
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