Debenhams Group reported a 24.7% fall in full-year revenue to £917m, but profitability is improving as the company pivots to a higher-margin marketplace model.

Group gross merchandise value (GMV) fell 21.6% to £1.82bn, but underlying cash profit increased 34.6% to £53.3m as Debenhams, formerly Boohoo, accelerated its turnaround strategy. Gross margin improved by 40 basis points to 51.1%, the first increase since FY22.

The company said the lower reported revenue was the result of a deliberate strategic move towards marketplace sales, where only commission income is recognised rather than the full value of transactions. Marketplace GMV rose 14.9% to £620.4m and accounted for 34.1% of total GMV, up from 23.3% a year earlier.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Boohoo has made great progress on its turnaround plan over the past year. While the headline revenue figure shows a sharp decline, this isn’t too worrying for now. The main driver is its shift to a marketplace model.”

Adjusted earnings returned to profit at £7m, while pre-tax losses narrowed 69.2% to £108.6m, down from a FY25 loss of £352.5m. The company noted that every brand is now "profitable at Adjusted EBITDA level".

Operating costs fell 28.2% to £415.4m following warehouse consolidation, technology integration and wider restructuring initiatives.

The Debenhams brand continued to outperform, with GMV rising 11.6% to £730m and EBITDA increasing 38.5% to £34.8m, making it the group’s largest and most profitable business. PrettyLittleThing also returned to profitability, prompting management to retain the brand within continuing operations.

Despite the operational progress, shares fell around 4% intraday as investors focused on the sharp decline in reported revenue.

Dan Finley, group CEO, said: “This has been a year of significant and successful transformation for Debenhams Group. Since my appointment as Group Chief Executive in November 2024, I have been sharply focused on executing our multi-year turnaround strategy — and the progress is clear.”

Looking ahead, the group’s focus now turns back to growth. Its pivot to a marketplace model allows sales to scale quickly as more sellers are brought into the fold, and over 25,000 brands have already joined the group’s ecosystem.

May trading is expected at 8% ahead year-on-year, and management expects further gross margin expansion, double-digit EBITDA growth and sustained free cash flow generation in FY27.

“The turnaround continues at pace, with momentum in our multi-year strategy accelerating since year end. With the most significant restructuring phases substantially complete and exceptional costs expected to reduce materially… we have stayed disciplined, delivered results, and laid the foundations for more resilient, profitable and sustainable growth,” Finley said.

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