Debenhams sublets US warehouse to cut costs in turnaround push
Debenhams Group, the owner of Boohoo and Pretty Little Thing, has sublet a US distribution centre that was surplus to requirements to ID Logistics.
The deal is the latest step in the group’s turnaround strategy as it moves to reduce costs through an asset-light operating model.
Subscribe to TRBSpanning 1.1 million square feet, the manual, non-automated site in Pennsylvania opened in August 2023 and was operational until November 2024 when fulfilment of US orders returned to the UK.
The group has incurred approximately $124 million of costs at the site to date, including rent, operating costs and capital investment.
Debenhams said the sublease will materially reduce its future cash obligations while securing a long-term occupier for the facility. ID Logistics is expected to occupy the site from 1 August.
The group said its lease costs will fall from £13 million this year to £8 million in FY28 and £6 million in FY29, driven by $9.5 million in average annual sublease income. The remaining £6 million will cover the group’s Sheffield warehouse, Manchester head office, and a small London footprint. A further $20 million in lease-related costs will be covered under the terms of the sublease.
Dan Finley, Debenhams Group chief executive 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.”
