Boohoo Group PLC (AIM: DEBS) shares jumped around 10% to 23.37p in early trading after the £90 million disposal of its Sheffield distribution centre strengthened its balance sheet outlook and prompted an upgrade from brokers.
The company, which trades as Debenhams, sold the automation at its Sheffield distribution centre and reassigned the lease to Primark Stores Limited for £90 million.
Consequently, £76.5 million will be received on completion and £13.5 million due when vacant possession is delivered early next year.
The transaction is expected to leave net debt at a negligible level by the end of February 2027.
Peel Hunt upgraded boohoo to Add from Hold and increased its target price to 30p from 25p, describing the disposal as an “unexpected and transformational leap forward”.
The broker raised its 2027 pre-tax profit forecast by £4 million to £25.8 million, reflecting lower interest costs, and increased its 2028 forecast by around £15 million to £50.8 million.
Shore Capital also took a positive view, retaining its 'buy' recommendation and 35p target price. Its research described the transaction as a significant turnaround milestone that brings boohoo close to a debt-free position materially sooner than previously expected.
Shore highlighted annual reductions of around £12 million in depreciation, at least £10 million in interest expense and roughly £4 million in cash lease costs, which it expects to provide upside to pre-tax profit forecasts.
The broker also viewed accelerating second-quarter GMV growth as an important indication that the recovery is extending beyond cost cutting and balance-sheet improvements into renewed top-line momentum.
Shore maintained its 'Buy' stance, arguing that the disposal further de-risks the investment case and, together with improving GMV growth, provides additional evidence of progress with the turnaround.
---UPDATED TO REFLECT SHARE PRICE CHANGE AND ADD BROKER RESEARCH---
