Debenhams Group has announced that it has returned to growth in the first quarter of its financial year, with group gross merchandise value (GMV) increasing by 0.5% year-on-year.

The fashion group, which recently rebranded from Boohoo Group, said that its trading in May was “particularly strong”, with GMV growth of around 8%. It added that its return to growth has also been supported by “materially improved profitability and significantly improved cashflows”.

The firm said that in the three months to 31 May, its performance was driven by its Debenhams and PrettyLittleThing brands, with improvements also achieved in Boohoo, BoohooMan and Karen Millen.

Debenhams Group has also reported that its earnings margin has expanded year-on-year, which has delivered a “substantial increase” in adjusted earnings, while its exceptional costs and capital expenditure dropped by 72% and 54% respectively in Q1.

Debenham Group CEO, Dan Finley, said that the latest results mark "the inflection point" that it has been working towards.

He added: "This is the result of the heavy lifting of our multi-year turnaround: the move to an asset light marketplace model, the warehouse consolidation, the cost reset, and the rebuild of every brand on a single proprietary platform. That work is now translating into materially improved profitability, with adjusted EBITDA margin expanding and a substantial increase in adjusted EBITDA in the period, alongside significantly improved cashflows."

In its outlook, Debenhams stated that its strong momentum in Q1 underpins the board’s confidence in delivering double-digit percentage growth in full year earnings from the £53m guided for FY26 in March.

Following the announcement, shares in Debenhams increased by almost 20%.

Investment director at AJ Bell, Russ Mould, said the latest update suggests that recovery efforts are "beginning to bear fruit".

He concluded: "That progress has been achieved against a difficult consumer backdrop is a feather in the cap for management. A return to meaningful sales growth gave investors plenty of cause for optimism.

"The turnaround has also been supported by a shift from purely being a traditional fast fashion manufacturer to a model of carrying third-party products on which Debenhams earns a commission but leaves the logistics and costs of delivery to the supplier.

"Finley struck a confident tone as he stuck with full-year guidance and flagged an expected improvement in the group’s balance sheet supported by the planned sale of facilities in Burnley and the US."

---