Shares in Boohoo Group PLC (AIM:DEBS) jumped 11.7% to 21p as the online retailer trading as Debenhams Group said it returned to growth in the first quarter, with "materially" stronger profitability and cash generation.
Gross merchandise value grew 0.5% in the quarter to 31 May, with trading accelerating through the period such that May GMV was up around 8%.
The strongest performances came from the Debenhams and PrettyLittleThing websites, while Boohoo, BoohooMan and Karen Millen also improved.
Gross margin increased to 53.5% from 52.1% a year earlier, helped by a reduction in returns rates of about 5%.
Adjusted EBITDA margins expanded by 140 basis points, resulting in a "substantial" but unquantified increase in adjusted EBITDA during the quarter.
Exceptional costs fell 72% year on year, while capital expenditure dropped 54%, keeping the company on track to generate free cash flow.
Chief executive Dan Finley said: "Debenhams Group has returned to growth, and Q1 marks the inflection point we have been working towards."
He reiterated guidance for double-digit adjusted EBITDA growth in the current financial year from the £53 million level guided for the 2026 financial year.
The ratio of net debt to adjusted EBITDA is expected to fall below 1x this year, supported by trading cash flow and planned disposals of its Burnley property and US warehouse.
Finley said the improved growth was "the result of the heavy lifting of our multi-year turnaround: the move to an asset-light marketplace model, the warehouse consolidation, the cost reset, and the rebuild of every brand on a single proprietary platform".
Broker Panmure Liberum hailed the return to growth, saying the turnaround plan to simplify the operations, cut major costs, integrate all the brands into one ecosystem and then reinvigorate the brands "seems to be coming together".
"The proof points of the plan are real, but a FCF yield of circa 12% reflects that the shares are not reflecting the turnaround in its price."
Analysts at Peel Hunt added: "The group continues to make strong progress and appears to be on track to return to positive earnings this year, helped by further fixed cost reductions.
The FY26 finals are set for release later this month. We make no forecast changes today, but the group looks capable of beating our current expectations of FY27 EBITDA of c.£59m, +10.8% YoY."
** UPDATE: Adds share price, broker comments **
