British fashion retailer Debenhams raised its 2027 profit forecast after exceeding expectations for 2026 on Monday, as its turnaround strategy focused on cutting costs and debt begins to take root, sending its shares up more than 6%.
The iconic brand made a comeback in March last year after Boohoo rebranded as Debenhams and embarked on a plan to address the hit to profit from supply-chain challenges, weak demand and increased competition from low-cost fast-fashion names.
"The transformation work done has been huge and the noise (and costs) associated with these is now all but over," said Wayne Brown, a Panmure Liberum analyst.
The company forecast annual adjusted core profit of 53 million pounds ($70.37 million) for the year ended February 28, ahead of its upgraded guidance, driven by a 76% jump in second-half profit.
"All the signals and green shoots of the new business model are now visible," Reuters quoted Brown as saying.
Debenhams expects its fiscal 2027 adjusted core profit to grow by a double-digit percentage from the higher 53-million-pound base.
The retailer, which owns brands including PrettyLittleThing and Karen Millen, said gross merchandise value declines slowed for three straight quarters, exiting February down 5% compared with last year.
The company said all its brands continue to trade profitably on an adjusted core profit basis.
Debenhams had raised about 40 million pounds in February through an oversubscribed share placement, surpassing its initial 35 million-pound target, as it looks to boost liquidity.
The company has also been locked in a long-drawn tussle with top shareholder Frasers Group FRAS.L, majority-owned by British retail tycoon Mike Ashley, which unsuccessfully attempted to block its rebrand and oust its co-founder.
