Dan Coatsworth, head of markets at AJ Bell, said: “One swallow doesn’t make a summer but an upgrade to Debenhams’ earnings guidance gives investors hope and builds on well-received results last November.
“During the pandemic online retailers focused on growth but factored in little protection for the increase in costs coming out of Covid and lockdowns, particularly as people became more active in returning unwanted clothing.
“It makes sense that Debenhams is now focusing on profitability and an improvement in a balance sheet that still bears the scars of the post-Covid period.
“Some of the reduction in borrowings will be achieved by disposals, although the company has done an about-turn on the sale of PrettyLittleThing.
“Whether this genuinely is a result of an improved performance for this brand or just because of the lack of a willing buyer is open to question.
“The company’s youth offering seems to be doing well alongside the Debenhams brand, and the group is going to run with it.
“The focus on growing earnings and avoiding unprofitable sales on its range of clothing means revenue remains in a retrenchment phase.
“The market is likely to make some allowances for this situation in the short term but ultimately will want to see a return to growth at some point.”
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