boohoo posts adjusted profits but true financial success remains unproven

Up 4% at 26p (£405m) - Results for the six months ended 31 August 2026

boohoo has reported some strong H1 results:

• Gross merchandise value after returns up 3.7% (£619.5m)

• Revenue down 3% (£409.6m) but gross profit up 1% (£221.5m)

• Adjusted EBITDA up 14.6% to £24m, assisted by stable operating costs.

As I noted at the trading update, I'm pleased to see that the adjustments to H1 EBITDA have collapsed to only a few million pounds.

This means that actual reported EBITDA figure comes in cleanly at around £20m, not far from the adjusted figure. In H1 last year, reported EBITDA was negative.

The accounts are complicated by a very large item: "non-cash lease gains" of over £40m, also referred to as "gain on recognition of finance lease receivable".

Trying to put it in plain English, boohoo has restructured its warehouses leases and in this case, it has generated a one-off accounting gain. It does impact the shape of the company's balance sheet. It doesn't impact cash flow, at least not in the short-term.

If this one-off gain and other "exceptional" items - including the likes of amortisation and share-based bonuses - are all excluded from calculations, then boohoo made a small after-tax loss in H1. But the direction of travel is positive: the adjusted loss in H1 this year is only £2m, vs. £14m in H1 last year.

CEO comment:

“The turnaround continues at pace. The Group has returned to GMV growth, gross margins are expanding and returns rates lowering. Reported EBITDA has increased over 600% and profit before tax has improved to £28.3m. This is the first time the Group has delivered positive profit before tax since August 2021. I am pleased to report that net debt is expected to be negligible at year-end. This is significantly ahead of our original guidance provided at the start of the year. I see material opportunities ahead and we are fully focused on maximising them.”

There has been excellent progress for sure, but I'd be a little cautious when interpreting this "600%" increase in reported EBITDA. The main reason for the improvement in reported EBITDA, as mentioned above, was lower adjustments. That's a big achievement, but it's a one-off.

Similarly, the positive profit after tax figure is only made possible by the lease accounting gain. The restructuring that caused this gain is surely a positive event for the company, but it's also a one-off (and also non-cash).

Disposal: as previously announced, the company has achieved the disposal of the Sheffield site for £90m and also Nasty Gal for about £12m. As a result, "net debt is expected to be negligible at the year-end". Fulfilment migrates from Sheffield to Burnley with a new partner in the form of GXO Logistics.

Outlook: in line.

Trading in September continued to be good, with the Group experiencing further accelerated growth. In respect of the full year, the Board expects to deliver GMV growth and Adjusted EBITDA of no less than £59m, as previously guided, representing double-digit growth year-on-year, together with continued material improvement in Reported EBITDA, positive profit before tax, free cash flow generation and negligible net debt. The £100m fixed cost target remains on track.

Estimates

Panmure Liberum and Zeus have both published on boohoo today. To give an example of current forecasts, Panmure see fully diluted EPS of 1p in FY Feb 2027, 1.7p in FY Feb 2028, and 2.6p in FY Feb 2028.

Graham's view

The Stockopedia StockReport categerorises this as a Turnaround which matches perfectly with how the company would describe itself. From the point of view of the StockReport, it has low Quality (for now), but moderate Value and rising Momentum:

And it could start to look like a value share, if forecasts are hit. No dividend for now but a modeste PE ratio, based on forecasts:

Last month, I raised our stance on boohoo to moderately positive.

I don't see anything in today's report or in the broker forecasts that would make me want to upgrade our stance even further. I do think that the bullish thesis is fully intact: the company has transitioned to a more "asset-light" business model, owning less property and machinery and outsourcing where possible. If it works, this should see quality metrics improve over time.

For investors, it is now a diversified marketplace with access to thousands of brands, rather than a bet on a few fast-fashion labels.

This is now far more interesting to me than it was before, although its financial success remains to be proven. For that reason, I remain only moderately positive.