Boohoo FY Shares: Hargreaves Lansdown Flags Concerns Despite Turnaround Progress

Debenhams Group (LON: DEBS) (formerly Boohoo) reported full-year results that landed marginally ahead of expectations, but Hargreaves Lansdown said in a note following the release that its concerns about the fast-fashion group have not gone away.

Debenhams Group shares fell 2% on Tuesdya following the release.

Revenue fell 24.7% to £917 million, against an £891 million consensus estimate, with the decline driven primarily by the company’s shift to a marketplace model under which only commission income, rather than the full transaction value, is recognized as revenue.

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Underlying EBITDA rose 34.6% to £53.3 million, beating the £51 million forecast, supported by the higher margin profile of marketplace sales alongside ongoing cost savings and contract renegotiations. Free cash outflow more than halved to £18 million, though net debt climbed 19% to £93 million.

For the year ahead, management guided for double-digit EBITDA growth, a return to positive free cash flow and net debt falling below one times EBITDA.

Hargreaves Lansdown noted that the Debenhams division continues to be the standout performer, contributing around two-thirds of group EBITDA despite accounting for roughly 40% of sales.

However, the broker cautioned that top-line recovery in the Youth Brands segment, which includes PrettyLittleThing and boohooMAN, remains the critical test, with first-quarter sales growth of just 0.5% described as slim.

The note also highlighted ongoing governance risks, including tensions with the largest shareholder, Frasers Group, and a management compensation package pushed through without shareholder approval.

“Despite the pivot in strategy, our concerns about Boohoo haven’t disappeared,” Hargreaves Lansdown analyst Aarin Chiekrie said. “We’ll need to see more improvement in key customer metrics, sales and profits before we get too excited. The lowly valuation may look attractive at face value, but it reflects the major challenges ahead, as well as a competitive retail market.”