Shares in Boohoo Group dropped 14 per cent yesterday after plans were announced for a £35m equity fundraise as it continues its turnaround strategy.
Founder Mahmud Kamani, group CEO Dan Finley and non-executive director Iain McDonald all intend to participate in Debenhams Group’s planned fundraise at an issue price of 20p per ordinary share of £0.01 each in the company.
In an update, the company said it had already received strong support for its plans from directors and shareholders in excess of £24m.
The firm said its turnaround plan was ‘going apace’ but Boohoo Group’s share price tumbled 14 per cent on Tuesday following the announcement.
Online retail giant Boohoo Group rebranded as Debenhams Group in 2025 and its brands include Debenhams, Karen Millen, boohoo, MAN and PLT.
Debenhams Group outlined its plans for the £35m fundraise in a statement to the London Stock Exchange on Tuesday morning in ‘response to speculation’.
The planned fundraise will create additional liquidity and, in the board’s view, will deliver the optimal capital structure for the group, with an expected reduction in net debt to adjusted EBITDA ratio of less than 2x within FY27.
Alongside preparing for the planned fundraise, the board is in advanced discussions with its lending syndicate to provide the group with greater financial flexibility to deliver its turnaround and associated growth plan.
These discussions are focused on creating additional liquidity and delivering improved covenant amendments. The revised terms are conditional on completion of the planned fundraise.
In the statement the board said it remains confident of delivering £50m adjusted EBITDA in the current financial year to the end of February 2026.
The board also remains confident of double-digit adjusted EBITDA growth in the financial year ending February 2027.
The fourth quarter has continued to see material improvements in the group’s GMV trend, alongside the continued removal of significant cost from the business as it is simplified.
In FY26 cash lease costs are expected to total £17m which includes the costs of leased property that is now vacant.
The board now anticipates that lease costs in FY27 will reduce to c.£13m.
In addition, when the group’s vacant US property lease is exited, lease costs are estimated to fall further to c.£6m.
These remaining lease costs will predominantly relate to the group’s Manchester head office, the fully automated warehouse in Sheffield and a small London footprint.
The expected reductions in lease costs will have a positive impact on cash flow.
Similarly, the group’s capex costs are expected to fall to c.£8m in FY27 from c.£16m in FY26, further enhancing cash generation.
Depreciation in FY27 is expected to fall from c. £51m in the current year to c. £40 million and then to c. £37m when its distribution centre in Burnley is sold.
The board also expects interest costs to fall in FY27 from c.£20m in FY26 as the business deleverages.
FY27 working capital is expected to be marginally cash flow positive compared with FY26 and the board is anticipating further reductions in overall stock levels as a percentage of revenue. Exceptional items are also anticipated to be significantly lower in FY26 and FY27.
Confident outlook
The firm said: “As a result of this simplification of the group’s business, the planned fundraise, the continued focus on improving and growing the asset-lite marketplace model, and the resulting impact of significantly improving the group’s cash generation, the directors remain confident in the outlook for FY26 and FY27.”
The company has been involved in an acrimonious and long-running feud with Mike Ashley’s Frasers Group, which is Debenhams’ biggest shareholder.