Debenhams has secured debt funding of up to £175million over the next three years to help drive the online fashion retailer’s turnaround youth-orientated brands.
The group rebranded as Debenhams earlier this year, having previously traded as Boohoo, as new chief executive Dan Finley launched a multi-year strategy shake-up to revive its fortunes.
Boohoo, as well as Pretty Little Thing and MAN, are adopting the marketplace model used by Debenhams in efforts to halt deteriorating sales and profitability.
Debenhams, which also owns Karen Milllen, was bought out of administration in 2021 is now a profitable online marketplace for around 15,000 brands.
Nevertheless, its shares have fallen by more than 40 per cent since the rebrand.
Debenhams on Thursday announces the completion of a facility providing access to funding of up to £175million, maturing in August 2028 and replacing a previous £125million facility maturing in October next year.
The group rebranded as Debenhams earlier this year, having previously traded as Boohoo
It said the new facility provides ‘significantly enhanced financial flexibility, enabling the group to deliver its new multi-year turnaround strategy’.
Debenhams will pay financing parties, led by TPG Angelo Gordon, an interest rate comprising Bank of England base rate – currently at 4 per cent – plus an additional 7.3 per cent.
It told shareholders the rate reflected ‘the increased scale and flexibility of the facility’.
Finlay added: ‘We have put in place a new facility, 12 months early, with strong lenders, that aligns and supports our new strategy – supercharging Debenhams and turning around our youth fashion brands.
‘This follows a comprehensive and competitive review of the market.’
Debenhams shares were up 8.3 per cent to 15.1p in early trading
The Pretty Little Thing owner, which began trading as Debenhams last month despite pushback from major shareholder Mike Ashley, has seen performance deteriorate since its pandemic peak amid rising costs, greater competition and weaker demand.
It has endured fractious relationship with Frasers boss Ashley, who has so far failed in attempts to reshape the fast fashion group’s board.
Analysts at Shore Capital said: ‘The green shoots in the group remains in Debenhams in our view.
‘This is echoed in management’s attempts to rename the business’ listed name to Debenhams from Boohoo (rejected by shareholders).
‘The Debenhams division is said to be providing the blueprint for the wider business, focusing on a higher-margin marketplace model.
‘How this exactly translates into youth brands and Karen Millen is yet to be seen, and with the current consumer backdrop for discretionary retail still volatile, this area could remain a drag.
‘Frasers owns approximately 29 per cent of Boohoo and has not been shy in communicating its issues with the group.
‘Mike Ashley has been trying to gain greater control of the board and input into the running of the business, and we anticipate this pressure will remain.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .