Good morning. My name's Dan Finley, and I'm the Group CEO of Debenhams Group. Today, I'm going to update you on our FY 2025 results, and I'm joined by my colleague, our Chief Financial Officer, Phil Ellis. FY 2025 has been a year of substantial change for our business. The board recognized the need for change following a period of unacceptable and sustained underperformance. I was appointed into the role as Group CEO on the 1st of November, and my focus has been on stabilizing our business since then. In FY 2025, we have delivered GBP 41.6 million Adjusted EBITDA. This has only been possible due to the aggressive actions that we've taken as a team since my appointment on the 1st of November. We've delivered GBP 50 million of annualized cost savings and a 50% reduction in both our stock holding and CapEx.
The standout performance this year has been by the Debenhams brand. We bought Debenhams out of administration, and under my leadership, in our last financial year, we've grown it to GBP 654 million of GMV, a 34% year-on-year increase. We've delivered GBP 25 million of Adjusted EBITDA and completed a successful multi-year turnaround. But the most exciting thing about our Debenhams brand is we're just getting started. The Debenhams turnaround is the blueprint for the turnaround of the wider group as we roll out our marketplace-led model, which is capital light, stock light, and cost light. Over the second half of FY 2025, we have significantly deleveraged our business. We completed a successful and oversubscribed equity raise in November. We sold non-core property assets. We reduced our gross borrowings by GBP 200 million. Our net debt at the end of the year was down to GBP 78.2 million.
And post-year-end, we've announced a new three-year finance facility led by TPG Angelo Gordon of up to GBP 175 million. This is a multi-year turnaround. I'm focused on driving profitability, maximizing value for all our shareholders through supercharging the Debenhams brand and turning around our youth fashion brands. I'd now like to hand over to my colleague, Phil Ellis, our CFO.
Thank you, Dan, and good morning, all. I am Phil Ellis, the new Group CFO. I was appointed the 11th of March. Today, I will be updating you on the performance of the group up to the end of February 2025. Prior to starting the new role, I was Finance Director of Debenhams and helped Dan to oversee the transformation of that brand. I currently hold the position of Managing Director of PayPlus. Prior to joining Debenhams Group, I worked with Dan as Commercial Finance Director at JD Sports. Over the next few slides, I will cover the key financial highlights for last year. The numbers relate to continuing operations and therefore exclude PLT, which is being treated as an asset for sale. GMV performance has been driven by the strong growth in Debenhams, which has offset weaker performance in our youth brands.
Revenue has declined by 12%, largely reflecting the shift to marketplace, where we recognize only the commission associated with the sales. Adjusted EBITDA has grown 3% year-on-year and has performed in line with expectations set in March. Adjusted EBITDA margin has increased 80 basis points, largely driven by the cost reduction actions. In addition to these actions, significant effort has been taken to reduce inventory, which is 65% below last year, with 90% of stock less than six months old. CapEx has reduced significantly year-on-year by 58%. We expect both inventory and CapEx to continue to reduce as we move towards the Debenhams model. Finally, net debt finished at GBP 78 million, 18% below last year. GMV performance has been underpinned by the strong growth in the Debenhams brands, demonstrating the success of the marketplace model.
Strong growth in categories such as beauty and home has strengthened the breadth of the offer. Youth brands' performance has been impacted by cost of living challenges. Through this period of transformation, we plan to pivot the focus of youth brands to cash generation and profitability. Adjusted EBITDA margin has improved 80 basis points. This has been driven as a direct result of cost-saving initiatives focused on reducing our operating cost base. Significant savings have been achieved in distribution costs as we continue to migrate volume into our state-of-the-art Sheffield Distribution Centre. Alongside significant headcount savings, which were actioned in November, generating GBP 50 million of annualized cost savings. These have offset reductions in gross margin and marketing spend. In October 2024, the group agreed a GBP 222 million debt facility comprising GBP 125 million RCF and GBP 97 million term loan.
In December, we paid off the term loan ahead of schedule, supported by the sale of Soho and successful equity raise. This has resulted in a reduction in borrowings of over GBP 200 million year-on-year. As we move towards the Debenhams model, the actions we have taken to reduce inventory and CapEx are having a positive impact on cash flow. This month, we have agreed a new three-year GBP 175 million debt facility to support us delivering our future plans. Growth in active customer numbers in Debenhams has partially offset the decline driven by the youth brands. GMV per active customer has increased as customers shop across the wider breadth of the Debenhams marketplace. Marketplace now represents 30% of Group GMV. We are focused on growing this further as we pivot toward the Debenhams model.
I will now hand over to Dan, who will take you through the future strategy and outlook.
Thank you, Phil, for the update on our results. I'll now give a strategic update on the progress that we are making. We are Debenhams Group and going forward as Debenhams Group, new leadership, a new vision, a new strategy, and a new direction. The Debenhams Group transformation is underway. We are creating the right operating model. We are supercharging the Debenhams brand. We are pivoting to fashion-led marketplaces, and we're exploring the sale of PLT to a strategic buyer. The pillars of this transformation start with creating the right operating model: lean and fit for purpose, right-sized and appropriate for our go-forward strategy. This includes the potential consolidation of our distribution centers, tech and AI-enabled, as we position ourselves at the forefront of the digital retail space. Supercharging Debenhams is at the heart of our go-forward strategy. We have over 15,000 brands and partners in our ecosystem.
We've successfully launched our Debenhams PayPlus financial services business, and we continue to focus on the significant opportunity that we have to grow our take rate. We're pivoting to a fashion-led marketplace model, leveraging our Debenhams proprietary technology, offering expanded and greater choice to our consumers, and leveraging the huge customer audience that we have in our young fashion brands. As I look forward through the first half of FY 2026, we see strong, profitable growth continuing in our Debenhams brands. All brands are now trading profitably. We are on with right-sizing our youth brands, focused on the new management on cash generation and profitability. We expect H1 FY 2026 Adjusted EBITDA for continuing operations to be ahead of H1 last year. I'm excited by the significant medium-term opportunity that we have as a group and laser-focused on delivering this for the benefit of all our shareholders. Thank you very much.
I'm now happy to take any questions that you have for me or Phil.
Good morning, everyone, and thank you for joining in. If you'd like to ask a question, please type in using the toolbar at the bottom of the screen. The first question we have is from Andrew Wade at Jefferies. How much GMV and gross profit of the Boohoo labels contribute to the group? Are they around half of Debenhams brand gross profit?
Hi, Dan Finley here. No, the Boohoo brands are a small and increasingly small part of the Debenhams overall business and GMV. What we've seen is the Debenhams platform started four or so years ago, and the first brands on that platform were the Boohoo Group-owned brands. And over the course of the last three to four years, we've seen that community of brands grow to be over 15,000 strong. And our biggest category on Debenhams being home and significantly bigger than fashion, for example. So they are a small part of the overall Debenhams business.
The next question is from Andrew Wade at Jefferies. What is the 3P marketplace revenue within the Debenhams brand division, excluding beauty and labels?
We're not spelling out at this stage a greater breakdown of the third-party income versus the labels' income as we move forward. It was GBP 654 million of GMV. The majority of that is from our third-party marketplace business, and we see that being our area of significant growth going forward and the area of our strategic focus.
The next question is again from Andrew Wade at Jefferies. How is the circa GBP 100 million of OpEx in the Debenhams brand division split? So from the GBP 122 gross profit to GBP 25 million?
The main cost within the Debenhams cost base: marketing, people. Then we'll have distribution costs associated with our internal brand that we sell on that website.
The next question is from Sarah Roberts at Barclays. Could you give us more detail on the take rate for Debenhams, where it stands today, and how you plan on increasing it over time?
Yeah, we see the take rate as being a significant opportunity for us with Debenhams. If we look at Amazon as being best practice in terms of that overall take rate and publicly quoted in excess of 50%, we're at the early days of our journey on that take rate. And if we think about the constituent components of that, we start with commissions that are paid through by our partners for trading on our Debenhams platform.
We're building that out now and at the early stages of building that out through our Debenhams Ads retail media business, through our fulfilled and delivered by Debenhams 3PL opportunity that leverages our significantly invested, highly automated Sheffield Distribution Center and our Debenhams PayPlus financial services opportunity that we believe is an opportunity not just to better serve our customers through improved payment methods, but actually an opportunity to better serve our partner community by making it available on third-party partner websites as well.
The next question is again from Sarah Roberts at Barclays. Can you provide more detail around the RCF that you have entirely drawn down on the facility?
We've just put in place a new financing arrangement, a three-year facility led by a consortium of lenders led by TPG Angelo Gordon. We are not fully drawn on the facility.
The next question is from Mia Strauss at BNP Paribas. What is the restated H1 Adjusted EBITDA for FY 2025, excluding PLT?
It's GBP 16.6 million.
Next question is from Anubhav Malhotra of Panmure Liberum. Can you please explain the rationale for the decision to sell PLT and not the other youth brands?
We see in PLT we have a fantastic, globally recognized youth fashion brand that is of significant size and scale and we believe has significant opportunities ahead for it. As part of our ongoing business review, we're determined to explore the opportunity to maximize value for all shareholders. We've noted with interest some of the interesting changing dynamics and macroeconomic situation relating to that fast fashion world, notably with the changes that have taken place in North America and the impact that that has had on a number of major global players. We also note with interest the valuation that was achieved for Topshop by ASOS on the interested parties associated with that transaction as well.
So we see the opportunity to potentially realize significant value through a potential sale to a strategic partner of our PLT brands, and that's something that we are exploring as part of our ongoing business review. In the meantime, we're very focused on improving the performance of that business, turning that business around, and we are pleased that now that business is profitable again.
The next question is from Mia Strauss at BNP Paribas. What is your view on TikTok Shop and how big of a threat is that to marketplace model?
Look, I think TikTok is part of that next wave of social media's way in which people discover, explore, love, are inspired by content that's generated by creators. I remember questions like this about, you know, are Facebook going to disintermediate retailers? Is Google Shopping going to disintermediate retailers? Actually, what we see is TikTok is a great platform, amongst many others, and TikTok Shop within that, a great opportunity to showcase our amazing brands and our amazing products to a huge consumer audience that drives revenue for us. So we see it as an opportunity rather than a challenge or a threat.
The next question is from Sarah Roberts at Barclays. What is the strategy for turning around the rest of the youth brand, excluding PLT? Are there any other assets, such as Karen Millen, that you could potentially sell going forward?
In the youth brands, we're really focused on pivoting them to be fashion-led marketplaces. We see a huge opportunity to leverage a significant customer base, global social media audience, and consumer engagement that they have. A great opportunity to showcase more brands and more products to our consumers through our youth brands as they pivot to be marketplace-led, fashion-led platforms. So it's great to see thousands of brands now on the Boohoo website. It's great to see consumers engaging with fashion and beauty beyond just the brands that we own, operate, and sell ourselves. So we're very focused on extending choice to our consumers so that we can maximize the opportunity to grow our share of wallet with the huge consumer base that we have. Of course, we have a number of brands within our portfolio, and as part of the business review, all options are on the table.
But at this stage, it is PLT that we believe has a significant opportunity for sale to a potential strategic buyer. Hence, we are exploring that potential sale at the moment.
The next question is from Sarah Roberts at Barclays. We have around 20% sales exposure in the U.S. Are you able to quantify the tariff impact you've seen?
In terms of the sales performance in the U.S. since the tariffs went in place, we've obviously priced up in order to protect ourselves from tariffs associated with China. We are ready for the changes that kick in at the end of this week on Friday. We have seen a slowdown in our U.S. performance in those markets, and we've taken appropriate action from a margin and a marketing point of view to protect ourselves.
The next question is from Mia Strauss at BNP Paribas. What is your outlook on consumer spending, and what is your strategy to participate in promotional activity?
Look, clearly the U.K. consumer environment is challenging, seems to be getting more challenging, and lots of talk about it continuing to be challenging going forward. We are very focused on what we can control and the significant opportunities that we have ahead of us to materially improve the performance of our business. As a group, we typically operate in the value space, and our experience has been, and what I've seen in my experience is that during challenging economic times, value-oriented retailers are better placed to perform within that environment. Of course, we're not just a U.K.-only business. We are a global business, and we see additional opportunities for us as we refocus on the opportunities internationally.
While there's a lot of change in the U.S. and uncertainty about how that looks going forward, what it is, is potentially a bigger opportunity for us than some of our competitors. Some of our major global competitors are potentially facing an existential threat to their operating model in the United States under the Trump government and with changes that they are making. We note with interest that the U.K. government is also considering its approach to de minimis rules and what is or isn't an appropriate approach to take to those operators as well and people looking to import goods cheaply from China under the de minimis equivalence threshold. With every challenge comes a potential opportunity. We're very focused on doing what we can to improve the performance of our business.
We operate principally in the value space, and we want to make sure that we maximize the opportunities as they unfold, but recognize that the U.K. economic environment for the consumer particularly is likely to remain challenging.
Okay, that's all the questions. Thank you very much for your time. With that, we'll end the call.