Debenhams issues major update on its future after 'comprehensive market review'

Debenhams has secured £175 million in debt funding to support its turnaround strategy, aimed at stabilising its youth-focused brands and strengthening its online marketplace. The three-year facility, maturing in August 2028, replaces a £125 million arrangement due to expire next year and gives the group significantly greater financial flexibility.

The group rebranded as Debenhams earlier this year, after trading as Boohoo, as new chief executive Dan Finley launched a multi-year shake-up. He told This Is Money: "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, acquired out of administration in 2021, now operates as a profitable online marketplace for around 15,000 brands, including Karen Millen.

The company is extending the marketplace model used by Debenhams to its other labels, including Boohoo, Pretty Little Thing and MAN, in a bid to halt declining sales and profitability.

Frasers, which owns around 29 per cent of Boohoo, has clashed publicly with management, with shareholder pressure expected to continue.

Shares in Debenhams have fallen by more than 40 percent since the rebrand, though they rose 8.3 percent to 15.1 pence in early trading on Thursday following the funding announcement.

The facility, led by TPG and Angelo Gordon, carries an interest rate of the Bank of England base rate, currently 4%, plus 7.3%, reported Retail Week.

Debenhams said the rate reflected "the increased scale and flexibility of the facility" and that it provides "significantly enhanced financial flexibility, enabling the group to deliver its new multi-year turnaround strategy."

Debenhams is also reviewing its physical store portfolio and prioritising sustainability, committing to responsible sourcing and reducing its environmental impact.

The company aims to use its strengthened financial position to revive both its heritage and youth brands, seeking to cement its position in a rapidly changing online fashion market.