Boohoo gives up trying to clean up image and changes name to Debenhams

The controlling Kamani family have officially given up trying to detoxify their tainted Boohoo brand and are changing the name of the business to Debenhams, a former staple of the UK high street which they bought out of administration in 2021 for £55m.

It has been a decade of controversy since the Manchester-headquartered fast fashion business floated in 2014, seeing shares soar, then crash.

This morning’s change is being presented as part of an “ongoing business review” that claims the Debenhams business model and technology is now “driving force of the business”.

Dan Finley, Group Chief Executive Officer, said the name change is part of “the blueprint for the wider turnaround of the Group” and said at a briefing at 9am that he wanted Debenhams to be a marketplace, and to become to fashion what Spotify is to music.

Finley added: “Debenhams is back. The iconic British heritage brand, bought out of administration, has been successfully turned around.  Rebuilt for the future and transformed into Britain’s leading online department store.

“We’ve created a thriving community of brand partners with millions of consumers and we are growing rapidly. The most exciting thing is that we are just getting started. We see a clear path to scaling this into a £multibillion GMV business with strong profitability.

“The successful turnaround of Debenhams is our blueprint for the wider turnaround of the Group. The turnaround of our Youth Brands is underway and will take time. I have inherited significant challenges.  I can see their future potential as they evolve into fashion-led marketplaces and adopt a leaner operating model.

“We go forward as Debenhams Group. This is a defining moment in our journey, reflective of our new strategy, new leadership and new beginnings. 

“Debenhams Group is sharply focused on maximising value for all shareholders. It will be at the forefront of global digital retail. It will be a leaner, faster and more technologically advanced business. I am confident our best days are ahead of us and I am excited for our future.”

Phil Ellis will become Group CFO and a member of the board, replacing Stephen Morana with immediate effect.

He is currently Finance Director of Debenhams and Managing Director of DebenhamsPay+. He has worked for the Group CEO, Dan Finley for 6+ years when they were both at JD Sports.

Stephen Morana will oversee the finalisation of the FY25 results and completion of the audit, as part of an orderly and planned transition.

“Finally, I am delighted to promote Phil to CFO of Debenhams Group. We’ve worked closely together for 6 years. Phil has played a key role in the turnaround and growth of Debenhams. Phil’s retail, marketplace, financial services and turnaround experience are what we need. I’d like to thank Stephen for his significant contribution in a challenging period. The board and I wish him well for the future.”

In a trading statement accompanying the shock news this morning, brands such as PYT and Boohoo are referred to as “the youth brands” although they contribute £947.3m of the £1,220.3m of revenue, and Debenhams took in £204.6m.

Total revenue was down 16% year on year. The group expects to report adjusted EBITDA for FY25 of around £40m.

Tellingly, no mention of any member of the Kamani family was made in this morning’s stock market announcement, though it was proved during the recent attempt by Frasers Group to get on the board that they are very much in control.

Finley said there would also be a greater emphasis on ESG, pointing to new partnerships with with Segura, a global leader in supply chain visibility; the Carbon Trust to develop a robust Net Zero Transition plan; with Pennies, a micro-donation tech charity, to drive positive social change; and the Graduate Fashion Foundation to invest in and develop future fashion talent. 

The move is an attempt at a reset for the business, which has been dogged by controversy.

In 2020 The Sunday Times uncovered evidence that factory workers at Boohoo’s Leicester location were paid less than half the national working wage, receiving just 3.50 pounds an hour.   

In January 2024 Boohoo was accused of mislabelling hundreds of thousands of garments at its “model” Leicester factory, according to a BBC Panorama documentary.

Its own internal inquiry chaired by retired judge Brian Leveson led to an Agenda for Change programme, to bring “both transparency and further independence to the process”. 

Co-founder and chairman Mahmud Kamani told MPs he would “fix whatever’s gone wrong” in an evidence session to parliament’s Environmental Audit Committee, and said it had “exited arrangements” with 64 Leicester suppliers and factories since late 2019 after finding violations of its code of conduct.

Another BBC investigation revealed that some garment factories allegedly linked to Boohoo were involved in money laundering and VAT fraud and that suppliers in Pakistan were paying workers 29p an hour in appalling conditions. 

This story will be updated through the day with analyst comment, share price movements and comments from a briefing at 9am.

Analysts Wayne Brown and Anubhav Malhorta of Panmure Liberum described the move as “exciting” and said: “Further cost savings, lower stock risk and launching fashion marketplaces are all part of a plan to further leverage the Debenhams playbook and technology. This is all part of phase 1 of a turnaround plan and we await to hear more at the prelims as to how the strategy will evolve.”

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “In a surprise move, Boohoo is adopting the Debenhams name as the new corporate brand. This is a significant moment and means the group is now forging a new path.

“Having previously chased the youth fashion market and dipped its toes into other areas through opportunistic investments, Boohoo stumbled amid a backlash against fast fashion and concerns around working practices and its supply chain.

“Beneath the chaos that surrounded the core fashion business, it has managed to take the roots of Debenhams and replant them as an online marketplace. Fortune has favoured the brave and Debenhams has blossomed in its new form.”

He added: “Boohoo gave a cheeky hint last November that Debenhams was being brought to the front of the queue after appointing the brand’s boss, Dan Finley, to become group chief executive. Debenhams has now become the group’s profit driver, so it makes sense to make it the core engine.

“While Debenhams hasn’t operated physical stores since 2021, the brand still resonates with the public. Its death as a physical retailer was down to falling profits and rising debts, together with a structural shift in people buying more goods online.

“The idea of going to a vast department store on the high street or retail park to buy an array of goods went out of fashion in the modern world, yet the concept is now alive and well online. That’s how Boohoo has managed to resuscitate one of the UK’s best known shopkeepers.

“Retailers are increasingly going down the multi-brand path to sell goods. Next operates a platform to sell and ship third party goods.

“Marks & Spencer has gone down a similar road and now sells products from more than 100 third-party brands. It’s all about giving shoppers choice. Rather than have to click through countless websites, you can do everything from one site.

“These developments mean that Debenhams has serious competition and its resurrection is still going to take hard work to sustain momentum.

“The stock market reaction to the news is informative. Boohoo’s share price only nudged up a small amount in early trading, implying some scepticism among investors that the strategic pivot is the answer to the company’s problems.”