Boohoo Group (DEBS) shares surged around than 20% on Wednesday after the company reported its first return to growth in several years, signalling early progress in its multi-year turnaround plan led by the Debenhams marketplace strategy and renewed strength in key labels including PrettyLittleThing.
For the three months to 31 May, gross merchandise value rose 0.5% year on year, a modest but significant shift compared with a 30% decline recorded in the same period last year.
Momentum strengthened through May, when trading accelerated and GMV increased by around 8%, driven largely by Debenhams and PrettyLittleThing.
Chief executive Dan Finley described the period as a turning point, saying it marked the outcome of sustained restructuring efforts including the move to an asset-light marketplace model, consolidation of warehousing operations, and a broader reset of costs across the group.
He said the improvement in performance reflected the “heavy lifting” undertaken over recent years as the business rebuilt its operating structure around a single platform.
The recovery was not limited to its largest names with Boohoo also reporting improved performance across its core Boohoo, BoohooMan and Karen Millen brands, suggesting a broader stabilisation across its portfolio after a prolonged period of declining sales and operational strain.
Gross margin rose to 53.5% from 52.1% a year earlier, supported by lower returns and tighter operational control. Returns rates fell by around 5% during the quarter, adding further support to margins and cash generation.
Cost discipline was a key theme in the update, with exceptional costs falling 72% year on year and capital expenditure down 54%, reinforcing the company’s focus on sustainable free cash flow.
Adjusted EBITDA margins also expanded materially, with management highlighting a meaningful improvement in underlying profitability over the period.
The group also reiterated its financial trajectory, maintaining guidance for double-digit adjusted EBITDA growth in financial 2027, following an expected £53 million level in financial 2026. It also said it remains on track to generate free cash flow and reduce net debt relative to adjusted EBITDA to below one times, a key threshold for its balance sheet strategy.
Investor sentiment responded quickly to the update, with shares climbing sharply as markets reacted to the return to growth and improving cost profile.
Analysts noted that the latest figures represent the first positive quarterly performance in several years, contrasting with the steep declines seen at the start of the previous financial year.
Boohoo’s transformation has been shaped by a shift away from a purely fast-fashion model towards a marketplace structure that integrates third-party sellers alongside its owned brands. This repositioning has been central to attempts to rebuild revenue stability while improving margins and reducing capital intensity.
The group, which has faced sustained competition and rising operational costs in recent years, also navigated pressure from major investors including Frasers Group during its restructuring phase. The latest update suggests that internal consolidation efforts are beginning to translate into measurable financial improvement.
Full-year results for the year ended 28 February are expected within the next two weeks, which will provide a wider view of whether the early signs of recovery are extending beyond the first quarter into a more sustained turnaround.