In a bold move to revitalize its operations, Debenhams Group is actively considering the sale of Pretty Little Thing as part of an aggressive restructuring strategy aimed at accelerating its much-needed turnaround. This decision comes as new leadership tackles the significant challenges facing one of Britain’s most iconic retail brands.
Debenhams Turnaround Strategy Takes Shape
Chief executive Dan Finley, who assumed leadership last November, has implemented sweeping changes to stabilize the fashion retailer. The company has already achieved approximately £50 million in annualized cost savings since his appointment. Furthermore, management reduced headcount by 30% as part of initial efficiency measures.
Financial Performance and Challenges
Recent financial results highlight the urgency of the Debenhams turnaround effort. For the 12 months ending 28 February, revenue declined 12% to £790.3 million, resulting in an operating loss of £42.6 million. However, adjusted EBITDA showed modest improvement, rising 3% to £41.6 million.
Portfolio Restructuring Options
Beyond the potential Pretty Little Thing disposal, Debenhams is evaluating long-term options for its distribution centers in the US and Burnley, Lancashire. All company brands currently trade profitably on an adjusted EBITDA basis, providing some stability during this transitional period.
Shareholder Dynamics and Leadership
The restructuring occurs amid ongoing tension with major shareholder Mike Ashley’s Frasers Group, which has criticized Debenhams’ financial performance. Finley’s appointment represented a strategic decision to pursue an independent leadership direction for the Debenhams turnaround.
Historical Context and Rebranding
Boohoo acquired Debenhams out of administration in 2021 for £55 million, transforming the 247-year-old high street chain into an online-only business. In March 2025, Finley rebranded the group under the Debenhams name, signaling a renewed commitment to the historic brand’s revival.
Financial Restructuring Progress
The company strengthened its balance sheet through a new debt financing package worth up to £175 million in August. This arrangement replaced an existing £125 million facility and reduced the debt pile by £15 million to £78.2 million, providing crucial financial flexibility for the ongoing Debenhams turnaround.
Future Outlook and Expectations
Management expects earnings from continuing operations to improve during the first half of 2026. The decision regarding Pretty Little Thing will serve as a critical test of whether the current Debenhams turnaround strategy can deliver sustainable results for the scrutinized retail group.
Frequently Asked Questions
Why is Debenhams considering selling Pretty Little Thing?
Debenhams views the potential sale as part of a broader restructuring effort to streamline operations and focus resources on core business areas that can drive sustainable growth.
What financial improvements has Debenhams made recently?
The company achieved £50 million in annualized cost savings, reduced headcount by 30%, and secured new debt financing while decreasing overall debt by £15 million.
How has Debenhams’ financial performance been trending?
While revenue declined 12% to £790.3 million, adjusted EBITDA improved by 3% to £41.6 million, showing some operational improvements despite challenging market conditions.
What other assets is Debenhams evaluating for potential changes?
Beyond Pretty Little Thing, the company is assessing long-term options for distribution centers in the US and Burnley, Lancashire, as part of its comprehensive portfolio review.
How does shareholder dynamics affect the turnaround strategy?
Tension with major shareholder Frasers Group adds complexity, but current leadership maintains independence in pursuing what they believe is the best strategy for sustainable recovery.
What is the timeline for expected improvements?
Management anticipates earnings from continuing operations will show improvement during the first half of 2026, though full recovery will likely require continued strategic execution.
