Debenhams Group powers past guidance as marketplace pivot pays off

Core Insights - Debenhams Group reported an adjusted EBITDA of £53 million for the year ending February 28, 2026, exceeding previous guidance and reflecting a 36% year-on-year increase, driven by a 76% rise in second-half adjusted EBITDA [1][2] Financial Performance - The company raised its outlook for FY27, expecting double-digit percentage growth based on the higher FY26 EBITDA base [1] - February GMV showed a 5% decline year-on-year, marking the third consecutive quarter of improvement in GMV decline trends [3] - All brands within the group continued to trade profitably on an adjusted EBITDA basis [4] Cost Management - Fixed cost exit rate decreased to £119 million, which is £11 million below the previous guidance of £130 million, down from £175 million in FY26, with a target reduction to £100 million in FY27 [4] - Capital expenditure fell from £28 million to around £16 million in FY26, with expectations to reduce further to approximately £8 million in FY27 [6] - Cash lease costs totaled £18 million in FY26, expected to decrease to around £13 million this year, with potential further reduction to about £6 million after exiting a vacant US property lease [6] Debt and Cash Flow - Net debt stood at £90 million at the end of February, equivalent to less than two times adjusted EBITDA, with expectations to fall below one times adjusted EBITDA by the end of FY27 [5] - Interest costs were £21 million in FY26, anticipated to decline as the business deleverages and disposes of non-core property assets [6] - Depreciation is forecasted to drop sharply from around £59 million in FY26 to about £20 million in FY27, reflecting a lower asset base due to transformation-related write-offs [7] Strategic Focus - The company emphasized its shift towards an asset-light marketplace model as central to its turnaround strategy, with the Debenhams brand driving this transition [5] - The focus will increasingly be on free cash flow as a key performance metric, with expectations of material improvement in both operating and non-operating cash flow in FY27 [7]