Online retailer Debenhams Group reported its first pre-tax profit in five years and reduced its debt.

The company, formerly known as boohoo, reported a pre-tax profit of £28.3m for the six months to 31 August, compared with a £17.9m loss a year earlier. It also maintained its forecast for adjusted earnings of at least £59m for the full year and expects debt to fall to negligible levels by year-end.

The Manchester-based firm said trading remained positive into September and reiterated its medium-term ambition to generate more than £100m in annual pre-tax profit, supported by further cost savings and operational efficiencies.

Debenhams reiterated its full-year guidance, further boosting confidence in its change of fortunes ahead of the key Christmas trading period.

The turnaround follows several difficult years marked by falling demand, rising costs, concerns over fast-fashion sustainability and supply-chain practices, and heavy losses after the pandemic-era e-commerce boom faded.

Shares rose by around 6% to 26.5p on Friday.

AJ Bell head of financial analysis Danni Hewson said: "There was a time that investors would have taken any kind of profit at online fashion retailer Debenhams Group so it’s not a surprise to see the promise of £100 million in pre-tax profit in the medium term make a splash in share price terms. This guidance is lent credibility by the first-half results which accompany it, showing the company is back in the black for the first time since 2021.

“Under CEO Dan Finley, the company’s fortunes have been transformed. Much of this has been built around the Debenhams online marketplace, with its Boohoo and PrettyLittleThing brands only just starting to return to growth. Finley has pursued a strategy of selling third-party products on its platform. These sales are higher margin than its traditional fast fashion activities where it handled the manufacturing and logistics itself.

“The consumer backdrop remains unhelpful, but Debenhams’ improved financials and healthy balance sheet mean it is better placed to withstand any drop off in demand."

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