Boohoo Group PLC shares fell 6.7% to 21p after the online retailer announced plans for a £35 million fundraising at a slight discount.
The company, which trades as Debenhams Group, said the equity raise would be coupled with intended changes to the group’s lending covenants to improve liquidity as it continues a turnaround strategy.
Broker Peel Hunt said the company "continues to scale well" and should generate gross merchandise value of over £550 million this year, with all youth brands profitable now.
Following the aggressive cost-reduction programme that has seen fixed costs cut from £292 million in the 2024 financial year to an exit rate of £130 million this year.
Expected is around a 70% headcount reduction and the consolidation of five distribution centres into one. Analysts forecast year-end net debt of about £100 million, with "a small FCF outflow, as the business becomes cash generative in FY27".
Peel added that Boohoo is "clearly bumping up against its debt covenants" on its £175 million facilities to August 2028, but the "balance sheet is stable, with the business moving into FCF generation regardless".