Debenhams shrinks losses as turnaround ‘continues at pace’

Dan Coatsworth, head of markets at AJ Bell, said: “Boohoo’s owner Debenhams is finally back in fashion as its turnaround story sustains momentum.

“The company says every brand in its portfolio is now profitable, albeit that is only after making oodles of adjustments.

“At a clean level with no adjustments, Debenhams is still losing money.

“That might explain why the shares haven’t moved higher on the results.

“The turnaround efforts and finding ways to cut costs is old news.

“Investors now want profits and that’s still a waiting game.

“With the business now in a stronger position after years in the doldrums, the next phase is to accelerate revenue growth and do so without resorting to widespread discounting.

“A marketplace model gives customers lots of choice and Debenhams will be hoping that improves the chances of converting a shopper’s browsing session into sales.

“The only issue is that plenty of other retailers are embracing the marketplace model including Next and Marks & Spencer.

“Debenhams must also contend with the rise of Vinted where consumers are busy looking for a bargain from a selection of pre-loved clothes.

“Vinted customers are exactly the type of people who may have historically bought from Boohoo and other fast-fashion brands.

“All this means Debenhams will have to work hard to reach the next level in its turnaround story.

“Stabilising the business is a massive achievement, but reigniting profitable growth won’t come easily.”