Boohoo Group PLC's (AIM:DEBS) shares rose 6% on Wednesday as analysts said delayed annual results signalled strategic change as the new leadership team shifts the business to a marketplace model.
While the changes were largely welcomed, they will "require fortitude", according to analysts at Panmure Liberum, perhaps for both management and investors.
Shares in the retailer, trading as Debenhams, rose most of a penny to 15.48p by mid-afternoon, having sunk to an all-time low below 14p earlier this month before the completion of its refinancing was announced, triggering the publication of final results as the last box to be ticked as part of the turning-a-new-leaf process under CEO Dan Finley.
The results saw a loss before tax of £43.4 million reported for the year to 28 February, reduced from £49.2 million the year before.
"A new C-suite and strategy has led to significant exceptional costs," Panmure said, adding that this "should come as no surprise" as tidying up the balance sheet is "noisy but welcome".
"It is rare on the public markets that such decisive actions are taken but there is a plan and the funding to execute this plan (with refinancing recently concluded).
"The plan is to create a stock light, capital light marketplace across all areas of the group and deliver a sustainable growth model."
Group revenue dropped 12% to £790.3 million, with the shift to a marketplace model meaning that only commission income is recognised, not full transaction value.
Marketplace contribution nearly doubled from the prior year and now makes up nearly 30% of total gross merchandise value, with Debenhams brand GMV up 34% to £654 million.
Gross margin decreased 50bps to 52.60% due to higher promotional activity, especially in the Youth Brands. This was partly offset by higher-margin marketplace revenues.
Adjusted EBITDA rose to £41.60 million from £40.40 million. EBITDA margin increased by 80bps to 5.30%, helped by lower operating costs despite lower gross margin and brand investment.
Panmure said the proposed sale of PrettyLittleThings "should further clarify the direction of travel", while net debt falling 18% to £78.2 million shows that "cash is the key focus", with capex and inventory and all materially down.
Guidance for the current financial year points to EBITDA growth, with a strong start to H1, the analysts observed, with the planned sale of PLT and reduction in net debt reinforcing the focus on liquidity.