Manchester-headquartered Debenhams Group has agreed a £90m deal with Primark for the automation assets and lease at its Sheffield distribution centre as it accelerates its shift towards a marketplace-led business model sending its share price soaring.
The group, formerly known as Boohoo Group, has received £76.5m in cash after selling the site’s automation and reassigning the lease to Primark Stores Limited. The remaining £13.5m will be paid when Debenhams Group delivers vacant possession early next year. It’s share price rose almost 9% in early trading following the news.
The transaction is expected to reduce the group’s net debt to a “negligible” level by the end of its financial year in February 2027.
READ MORE: Myprotein-powered earnings surge fails to inspire THG investors as shares slide again
Debenhams Group is also entering into an agreement with an unnamed global third-party logistics provider, which will take responsibility for fulfilling the stocked products it continues to sell.
The arrangement will also allow the business to expand its Delivered by Debenhams fulfilment service beyond fashion.
Debenhams Group has been transitioning towards what it describes as a “capital-lite, stock-lite, cost-lite and cash generative” marketplace model, with the ambition of marketplaces eventually accounting for well over half of its gross merchandise value.
The sale is expected to reduce annual depreciation by around £12m, including £3m relating to a right-of-use asset. Interest costs are forecast to fall by at least £10m a year, while annual cash lease costs should decrease by approximately £4m.
Dan Finley, group chief executive, said: “The Debenhams Group turnaround continues at pace, and this transaction helps accelerate our progress. As a result of the disposal, net debt is now expected to be negligible at our year-end (Feb’27). We are also pleased to report that GMV growth has accelerated in Q2.”
The group, whose brands include Debenhams, Boohoo, BoohooMan, PrettyLittleThing and Karen Millen, returned to GMV growth during its first quarter and said that growth accelerated in the second.
It reported adjusted EBITDA of £53.3m for the year ending February 28, 2026, an increase of 35%, with every brand profitable at EBITDA level. Revenue fell 24.7% to £917m as the business prioritised more profitable sales.
A first-half trading update is due to be published on September 17.
