Register to get free articles
Want unlimited access? View Plans
Already have an account? Sign in
Debenhams Group, formerly operating as Boohoo Group, has sublet a US distribution centre that was surplus of requirements in a move that helps cut costs as part of its turnaround strategy.
The retailer has sublet the 1.1 million square foot distribution centre in Pennsylvania, which opened in 2023 to logistics company ID Logistics. The centre was in use for 15 months before ceasing operations in November 2024 and shipping fulfilment of US orders moved back to the UK.
The site, which had roughly 8.5 years left on its lease, would have accumulated an estimated $100m (£74.5m), which is surplus to its requirements. The site was valued to be around $9.5m (£7m) annually, leaving a significant cost reduction.
It said the group’s goal of alleviating its liability has been a “key priority” as it seeks to transition to an asset-light business model. ID Logistics, has signed a long-term occupation for the site expected to commence on 1 August 2026.
Debenhams Group’s expected lease costs for the annual year is estimated to stand at £13 million, which will further reduce to £8m in FY28 and £6m in FY29, following the sublet’s cost optimisation. The ongoing lease costs will include sites based in the Sheffield warehouse, the Manchester office as well as a smaller footprint across London.
The transaction will result in a £40m accounting gain, which will be reflected in the group’s results for the first half of the financial year.
Dan Finley, Group CEO, said: “This is a significant development. The US DC 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.”
