Debenhams (née boohho) has secured debt funding of up to £175million over the next three years to help drive the Manchester online fashion retailer’s turnaround for its youth-orientated brands.
The group rebranded as Debenhams earlier this year, as new chief executive Dan Finley launched a multi-year strategy shake-up to revive its fortunes.
Boohoo, as well as subsidiaries including Pretty Little Thing and MAN, are adopting the marketplace model used by Debenhams in efforts to halt deteriorating sales and profitability.
Debenhams, which also owns Karen Milllen, was bought out of administration in 2021 and is now a profitable online marketplace for around 15,000 brands.
Nevertheless, its shares have fallen by more than 40 per cent since the rebrand.
Shares have jumped since yesterday, however, on completion of a facility providing access to funding of up to £175million, maturing in August 2028 and replacing a previous £125million facility maturing in October next year.
It said the new facility provides ‘significantly enhanced financial flexibility, enabling the group to deliver its new multi-year turnaround strategy’.
Debenhams will pay financing parties, led by TPG Angelo Gordon, an interest rate comprising Bank of England base rate – currently at 4 per cent – plus an additional 7.3 per cent.
It told shareholders the rate reflected ‘the increased scale and flexibility of the facility’.
Finlay added: “We have put in place a new facility, 12 months early, with strong lenders, that aligns and supports our new strategy – supercharging Debenhams and turning around our youth fashion brands.
“This follows a comprehensive and competitive review of the market.”
Debenhams shares peaked at 16.1p in late trading yesterday on the news, although they had settled at 14.7p by this afternoon, still more than 50% down on its 38.52p peak last December.
The Pretty Little Thing owner, which only began trading as Debenhams last month, despite pushback from major shareholder Mike Ashley, has seen performance deteriorate since its pandemic peak amid rising costs, greater competition and weaker demand.
It has endured fractious relationship with Frasers boss Ashley, who has so far failed in attempts to reshape the fast fashion group’s board. Ashley’s Frasers Group owns approximately 29 per cent of Boohoo and he has not been shy in communicating his issues with the group’s strategy.
