Boohoo Group PLC (AIM:DEBS) shares strutted 23% higher to 14.3p after the online marketplace reported underlying profits ahead of expectations and gave higher guidance than analysts had forecast.
The company, which trades as Debenhams, reported adjusted EBITDA of £20 million for the half-year to 31 August, 5% ahead of the prior year and beating average analyst forecasts.
EBITDA guidance for the full year of £45 million is also ahead of consensus expectations of £33 million.
Analyst John Stevenson at Peel Hunt said: "There was strong progress at Debenhams (boohoo), with the Debenhams platform performing well (+20% GMV, +50% EBITDA YoY), delivering an EBITDA margin of 15%."
However, he noted that the Youth Brand segment, including PrettyLittleThing, boohooMAN, and Nasty Gal, saw significant continued declines, down 41% in revenue, though all brands were now said to be adjusted EBITDA-positive as the turnaround process continues.
"There is still a lot of heavy lifting going on, with significant reduction in stock, fixed costs, and PLT still up for sale," Stevenson noted.
"The group is not yet FCF positive, although there remains significant headroom to see the process through, along with the sale of the Burnley freehold," he said, maintaining his 'hold' recommendation.
Aarin Chiekrie, analyst at Hargreaves Lansdown, felt it was "another disappointing set of results", with the previously announced strategy change "failing to have the desired effect so far".
He said the rebranding as Debenhams to tap into the heritage of the iconic British brand has "done little to revive customer numbers and stem its falling sales".
He feels breathing life back into its younger brands "needs to be the focus, given that sales here are falling at an even faster pace, and the segment used to account for the majority of the group’s sales".
While first-half losses have slimmed thanks to a significant streamlining of the business, Chiekrie said "the bottom line is that the fast-fashion group remains loss-making, and while CEO Dan Finley probably needs to be given more time to properly execute his strategy change, the near-term sales outlook doesn’t seem to be improving much".
The shares' bounce came after falling over 54% since May.