Boohoo secures sublease for unused US distribution centre

(Sharecast News) - Boohoo said on Friday that it has completed the sublease of a distribution centre in the US that it no longer uses to ID Logistics, mitigating a "material future liability".

The 1.1 million sq. ft distribution centre in Pennsylvania opened in August 2023 and was operational for around 15 months. However, the company ceased operations in November 2024, with fulfilment of US orders returning to the UK.

To date, Boohoo - which trades as Debenhams Group - has incurred around $124m of costs at the site, covering rent, operating costs and capital investment. It said the facility, which is surplus to its operational requirements, carries approximately 8.5 years remaining on the lease term, representing around $100m of future lease and holding costs.

"Mitigating the group's liability has been a strategic priority as part of its transition to an asset-light operating model," it said. "The sublease materially reduces the group's future cash obligations while securing a long-term occupier for the site, with ID Logistics expected to commence occupation on 1 August 2026 until the end of the group's lease."

The transaction has resulted in an unaudited non-cash exceptional credit of about �40m to the income statement relating to the recognition of an asset on the balance sheet for the future sublease payments, which will be reflected in the first-half results.

Chief executive Dan Finley 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."

At 1117 BST, the shares were up 2% at 24.00p.

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