Boohoo Group PLC (AIM:DEBS), which trades as Debenhams Group, said it has significantly reduced a costly legacy liability after agreeing a long-term sublease of its former US distribution centre in Pennsylvania.
The online retailer, formerly known as Boohoo Group, has sublet the 1.1 million sq ft facility in Elizabethtown to logistics operator ID Logistics.
The warehouse opened in August 2023 but operated for only around 15 months before the group shut it in November 2024 and moved fulfilment of US orders back to the UK.
Debenhams said it had incurred around $124 million of costs at the site, including rent, operating expenses and capital investment.
The facility still had about 8.5 years remaining on its lease, representing roughly $100 million of future lease and holding costs. The company said reducing that exposure had been a strategic priority as it shifts towards an asset-light operating model.
ID Logistics is expected to take occupation from 1 August 2026 and remain in the building for the remainder of the lease term.
The agreement will result in an unaudited non-cash exceptional credit of about £40 million, reflecting the recognition of future sublease payments as an asset. Subject to audit confirmation, the gain will be recorded in first-half results.
Annual lease costs are expected to fall to £13 million this year, before reducing to £8 million in the 2028 financial year and £6 million in the 2029 financial year.
Group chief executive Dan Finley said: “This is a significant development. The US DC was a major contributor to the challenges that the company has faced.”
He added: “Our turnaround strategy continues at pace.”
