What: Debenhams Group posted a pre-tax profit of £28.3m for the six months to 31 August, its first since 2021, helped by a £40.6m non-cash gain from subleasing its US distribution centre.

Why it is important: The headline profit leans on a £40.6m non-cash lease gain, but the underlying loss narrowed from £52m to £12m, so the turnaround is real while profitability is still being rebuilt.

Debenhams Group, formerly Boohoo Group, reported a pre-tax profit of £28.3m for the six months to 31 August, against a £17.9m loss a year earlier. The result includes a £40.6m non-cash gain from subleasing its US distribution centre. Excluding non-cash lease credits, the loss before tax narrowed from £52m to £12m.

Gross merchandise value before returns rose 1.8% to £863.8m, accelerating from 0.5% in the first quarter to 2.9% in the second. GMV after returns grew 3.7% as the returns rate fell from 29.6% to 28.3%. Adjusted EBITDA reached £24.0m, up 14.6%, with a margin of 5.9% against 5.0%. Reported EBITDA was £19.7m, against a £3.5m loss, as exceptional costs fell 82.4% to £4.3m.

Debenhams GMV rose 14.1% to £363.8m, about 42% of the group. PrettyLittleThing and Boohoo together grew 1.1% to £368.8m. BoohooMan fell 28% to £79.8m as the decline slowed under a focus on profitability, and Karen Millen fell 4.8% to £51.4m.

The group expects full-year adjusted EBITDA of at least £59m and negligible net debt at year-end, ahead of its original guidance.

IADS Notes: Debenhams' first-half profit follows a turnaround built on a marketplace model. Fashion Network in March 2026 credited the improvement in annual adjusted EBITDA to the shift to an asset-lite, marketplace-led model, warehouse consolidation and a reset cost base. Retail Week in June 2026 reported that every brand had returned to profitability, with the group deliberately trading lower GMV for more profitable sales. Reuters in July 2026 noted that GMV growth was continuing alongside better sales margins and lower customer returns, with PrettyLittleThing back to growth and profitability and net debt set to fall through sales of non-core property. Retail Week in September 2026 showed the property side of that approach: the sale of the Sheffield distribution centre's automation and the reassignment of its lease to Primark for £90m, expected to cut annual depreciation by about £12m, interest costs by at least £10m and cash lease costs by about £4m. The falling returns rate sits within a wider industry effort, with The Robin Report in April 2026 describing returns as an $850 billion cost centre that retailers are tackling through AI-based risk management and circular logistics.

Debenhams Group returns to growth and posts first profit since 2021