Good morning, and welcome to the Debenhams Group half-year results for the six months ended 31st of August 2025. My name's Dan Finley, and I'm the Group CEO, and I'm joined this morning by Phil Ellis, our Group CFO. Our turnaround continues at pace. I'm pleased with the progress that we're making, but recognize that there is still much to do. Our new business model is rolling out. Stock-lite , our stock is down to GBP 68 million, minus 35% on the same period last year. Capital-lite , our CapEx is now GBP 7.5 million, down 50% on the same period last year. Increasingly margin-rich, our adjusted EBITDA margin 6.7%, up 180 basis points on the same period last year. Our financial performance is improving. Adjusted EBITDA is up GBP 20 million in the period, plus 5% on last year. Our net debt is down GBP 111 million, down 22%.
Our loss before tax is down, a loss of GBP 3 million, down 97% on the same period last year. Our strategic transformation is progressing. We are creating the right operating model. Our fixed cost base has been reduced by GBP 160 million. We are supercharging Debenhams with 20% GMV growth in the period. We are pivoting to fashion-led marketplaces, with marketplace now representing 32% of our GMV. Debenhams.com is Britain's online department store. We are supercharging Debenhams. GMV has grown at 20%. EBITDA has grown at 50%, and we're generating an EBITDA margin of circa 15%. We have a highly attractive business model. Stock-lite . We do not take the stock risk. Capital-lite . Margin-rich and highly cash-generative.
We have significant take-rate expansion opportunities as we move forward, as we scale our retail media business, as we scale our Delivered by Debenhams that leverages our state-of-the-art distribution center in Sheffield. As we roll out and scale our DebenhamsPay+ business, our financial services offering into our marketplace ecosystem. Our marketplace partners have grown rapidly and considerably. At the end of the half, we had over 20,000 partners and brands in our marketplace ecosystem, up from 10,000 this time last year. We offer a growing and great selection of choice to our consumers, with well-known brands available to buy on debenhams.com across fashion, beauty, and home. We leverage a proprietary technology ecosystem, partnering with some of the biggest technology firms in the world. We are creating an ecosystem that powers our marketplace strategy.
We are embracing and rapidly adopting the latest AI technologies through major global partnerships with some of the leading names in the space. For example, with AWS, we are automating a lot of our back-end operations. With Google, we're partnering to create amazing content more quickly, more cost-effectively, and in a way that can be scaled more rapidly. With peak.ai , we are revolutionizing how we buy merchandise and trade using the latest AI technology. Our Debenhams brand is much loved and well-known by everybody in the U.K. We continue to invest in developing our brand, making sure it is ever-present where our customers are, as we continue to make Debenhams the destination of choice for consumers. We're delighted with our relaunch of Designers at Debenhams , partnering with Ashish and with Kim Cattrall as the face of the campaign.
We see so much opportunity to further expand our Designers at Debenhams in the months and years ahead. Debenhams has always been a much-loved Christmas shopping destination. We're really pleased with the consumer engagement with our Christmas Delivered campaign, fronted by Peter Crouch, Judi Love, and Olivia Attwood. We see significant global opportunities ahead for our own labels within our Debenhams family of brands. We've recently launched Nasty Gal with Amazon and a number of our brands on Nordstrom, Macy's, and Bloomingdale's online in the U.S. We see this as a significant growth opportunity. As I take a step back, as we approach our five-year anniversary of the acquisition of Debenhams, I continue to be super excited by the significant opportunity ahead. We are building a multi-billion GBP GMV business with an EBITDA margin that will exceed 20%.
We now have a clear line of sight that over the next three years, Debenhams will be a GBP 1 billion GMV business generating EBITDA of at least GBP 50 million. We are supercharging Debenhams. We've made much progress, but the most exciting thing is how much opportunity lies ahead. The multi-year turnaround of our youth brands is underway. Boohoo, PrettyLittleThing, BoohooMAN, are globally recognized fashion brands. Collectively, they have 46.5 million social media followers. Not only do we produce great product rapidly, we're able to deliver that quickly to our consumers, a key point of difference against some of our major global competitors. Our consumers can now order by midnight for next-day delivery across Boohoo, BoohooMAN, and PrettyLittleThing. We're on with our pivot to fashion-led marketplaces, which will provide greater choice to our consumer and significantly improve the economics of our brands.
We're delighted that thousands of brands are now live on our new fashion-led marketplaces. Our focused work has improved our brand profitability. All of our youth fashion brands are now profitable again. As we continue to increase the marketplace mix, this will significantly improve the economics of the brands. We now turn our focus to getting back to growth. We see a huge opportunity to generate significant EBITDA from our youth fashion brands again. We're really excited about the opportunities ahead for Karen Millen. We've appointed a new leadership team, and we've got a new strategy as we create a global premium lifestyle destination. We see a huge worldwide licensing opportunity, in particular for our Karen Millen brand. We've taken decisive and quick action to substantially lower our fixed cost base. Our fixed costs have been reduced by over GBP 160 million a year.
Our FY 2026 exit rate, our fixed costs of circa GBP 130 million, and in the near- term, we expect this to reach circa GBP 100 million. The material operational improvements that we have made present a material EBITDA margin expansion opportunity, and our EBITDA growth opportunity is tremendous. I'll now hand over to my colleague, Phil Ellis, our Group CFO.
Thanks, Dan. Hi, I'm Phil Ellis, CFO. First, I'd like to recap on the positive performance for the half. I'm delighted to say adjusted EBITDA is ahead of last year on a continuing and total operations basis. This is in line with the guidance we gave at the full-year results. GMV has declined by 19%, but has been improving quarter on quarter, which I will share on a later slide. Debenhams continues to be the standout performer for the group, delivering 20% GMV growth and 50% adjusted EBITDA growth. Statutory losses are in a significantly better place than last year, highlighting a significant amount of restructuring that is already behind us. We are really pleased with the recovery we are seeing in the GMV declines. As you can see from the slide, we have seen significant positive momentum through the year.
We started with declines of 31% in quarter one, improving to 24% in quarter two, 17% in quarter three, and most recently, 13% in November. The direction is positive and gives us confidence as we head into quarter four. There has been a significant amount of work done to reduce the cost base as part of the turnaround plan. We expect to exit the year with annual fixed costs at GBP 130 million. This is a GBP 160 million reduction since FY 2024, driven by cost-saving actions initiated as part of the turnaround plan. We do not intend to stop there and expect to reduce the cost further to circa GBP 100 million in the near- term. The headcount reduction has been key to bringing down the cost base, reducing by 70% since FY 2024. This has been driven by the DC consolidation, tech migration, and savings through the head office functions.
Migrating all the brands onto our in-house tech platform has driven significant savings and efficiencies. This also supports the very efficient CapEx spend within the group. Tech costs have reduced by GBP 45 million since FY 2024, which is a huge 66% reduction. The move to the Debenhams operating model is in full effect and can be seen in the results. Marketplace mix has grown significantly to 32%. This is having a positive effect on a number of areas. Returns rates have reduced as the group mixes into lower- returning categories. Inventory has reduced by 35% as we move to the stock-lite model. CapEx has halved to GBP 7.5 million as we move to the capital-lite model. This is having a positive impact on free cash flow as the cash outflow reduces and we move towards free cash flow generation.
Net debt, as a result, has closed the half at GBP 111 million, down 22% on last year. CapEx spend has come down significantly compared to the highs in FY 2022. We expect it to come down further in FY 2027 as we fully transition the group to the Debenhams capital-lite model. This is supported by the migration to the in-house tech platform. To conclude, the outlook is strong. We expect adjusted EBITDA on a total operations basis to finish the year at GBP 45 million. We feel this is a strong result and demonstrates the progress we are making with the turnaround plan. We look forward to FY 2027 when we expect adjusted EBITDA to build and grow double-digit compared to FY 2026. In terms of net debt, we expect positive movement as the cash benefits from the turnaround plan start to build.
We are guiding that net debt will reduce to levels less than 2x EBITDA in FY 2027, further reducing in FY 2028 to below 1x EBITDA. The transformation continues at pace and the outlook is strong. Thanks for your time today, and I'll pass you back to Dan.
Thanks, Phil. Our transformation and turnaround continues at pace. As I look forward, I see huge opportunities for our group. The material operational improvements that we have made present a material EBITDA margin expansion opportunity. As we get back to growth, the EBITDA opportunity for Debenhams Group is tremendous. Thank you for your time this morning, and I look forward to potentialising the significant opportunities that are ahead for Debenhams Group.