12th Jun 2026 11:47
(Alliance News) - boohoo Group PLC on Friday said it has reduced future cash obligations by subletting a US distribution site.
The Manchester, England-based online fashion retailer, which trades as Debenhams, has sublet a facility in Elizabethtown, Pennsylvania to ID Logistics, an Provence, France-based transport and logistics provider.
The facility opened in 2023 and operated for about 15 months. boohoo ended operations there in November 2024, when it moved fulfilment of US orders back to the UK.
The company has incurred approximately USD124 million in costs related to the site, including rent, operating costs and capital investment. There are 8.5 years of the lease remaining, representing about USD100 million in future lease and holding costs, but boohoo explained that the site is "surplus" to its current needs.
ID Logistics is expected to occupy the site from August 1 until the end of the lease.
"Mitigating the group's liability has been a strategic priority as part of its transition to an asset-light operating model. The sublease materially reduces the group's future cash obligations while securing a long-term occupier for the site," boohoo said on Friday.
The agreement means that the company is booking a non-cash exceptional credit of GBP40 million, through the recognition of an asset on the balance sheet for the future sublease payments, which will be reflected in results for the half year ending on August 31.
boohoo estimates that lease costs across the entire company in the current year will be GBP13 million, reducing to GBP8 million in financial 2028 and GBP6 million the following year. For the year ended in February 2025, the company's lease payments totalled GBP10.0 million.
Going forward, lease costs will include boohoo's Sheffield warehouse, Manchester head office and "a small London footprint". Other costs in the region of USD20 million associated with lease obligations will be covered under the terms of the US sublease, from which boohoo expects to receive an average of USD9.5 million in annual rental income.
Chief Executive Dan Finley commented on Friday: "This is a significant development. The US [distribution centre] was a major contributor to the challenges that the company has faced. One of my first actions in role was to close the US DC and the sublease of it mitigates a material future liability. Our turnaround strategy continues at pace."
In a trading update last week, the CEO said: "Debenhams Group has returned to growth, and Q1 marks the inflection point we have been working towards."
Gross merchandise value rose 0.5% year-on-year in the first quarter ended May 31. Peel Hunt noted this as the first positive quarter in "several years" - it compares to a 30% drop in GMV in the prior financial year's first quarter.
Among boohoo's brands are Karen Millen, Nasty Gal, boohoo, boohooMan and PrettyLittleThing, though it said in August that it is "actively pursuing a disposal" of the latter.
In February, boohoo outlined plans for a GBP35 million equity raise in order to pay down debt and noted talks with lenders to create additional liquidity.
boohoo shares were up 2.8% to 24.16 pence on Friday morning in London, and are up 8.8% over the past year.
By Holly Munks, Alliance News reporter
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