Boohoo Group PLC (AIM:DEBS) shares could not hold only early gains on Monday after the online retailer delivered underlying profits comfortably ahead of its own guidance, and nudged its outlook for the year ahead higher as cost-cutting proved more fruitful than expected.
For the year to February 2026, EBITDA came in at £53 million, marking a 36% improvement on the previous year, driven by a 76% surge in the second half.
The online fashion retailer, which operates under the Debenhams brand, said this latter increase reflected the accelerating impact of a cost-cutting and restructuring programme begun after the group ran into financial difficulties.
Chief executive Dan Finley said the business had reset its cost base, completed a warehouse consolidation, migrated to a new technology platform and "rightsized" its stock levels – work he described as "significant progress, ahead of our plan".
The company is shifting away from holding large amounts of its own stock and moving towards a marketplace model, where third-party brands sell through its platforms in exchange for a fee.
Fixed costs have been cut to an annual run-rate of £119 million, down from £175 million a year ago and £11 million lower than the guidance issued in February, with costs now expected to fall to £100 million in the current financial year.
Net debt stood at £90 million at the end of February, helped by a £40 million fundraising completed last month.
Finley added: "Our pivot to the stock-lite, capital-lite, highly profitable marketplace is working."
The company guided for double-digit percentage growth in underlying profits in the year ahead, an upgrade on previous forecasts.
Shares in Boohoo, which last week fell to their lowest since November, rose almost 6% in early trading before easing back to 17.78p by late morning.
Broker Shore Capital said it was "important" that the company appears focused on cost control and deleveraging the business, with the update stating that this was leading to cash flow from operations significantly improving, with expected benefits to come through during this year following lease exits.
"There has been clear progress in DEBS, and management, who are well incentivised, appear motivated to return the business back to growth, with a more palatable balance sheet."
** UPDATE: Adds share price and broker comment **