boohoo has recorded a 6% increase in its share price after it increased its earnings guidance for the current financial year.

The online fashion retailer, which is set to rebrand to the Debenhams Group, said it is currently trading above expectations and as a result, increased its earnings guidance from £45m to £50m.

The firm said the performance was due to continued momentum in its Debenhams brand, a "discernible improvement" in the performance of its youth brands, which includes PrettyLittleThing (PLT) and boohooMan, and accelerated progress in its transformation plan.

Furthermore, boohoo said it was particularly pleased with the pace and scale of PLT’s turnaround and the resulting material improvement in profitability.

The retailer stated that it is currently exploring significant licensing opportunities and continues to advance the sale of non-core assets, which would materially reduce its net debt in the next year.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, said that the update is positive news for investors.

He concluded: "Progress is being driven by continued momentum in its Debenhams brand, but importantly, all of its brands are trading profitably. That includes the once-struggling PLT, which the group had been looking to offload. But there’s been a step-change in performance since shifting PLT to a marketplace model. This model involves allowing third-party brands to sell their goods on its online platform, with PLT taking a cut of any third-party sales made, and banking just that cut as revenue.

"The marketplace model brings a host of benefits, allowing sales to scale quickly as more sellers are brought into the fold. The third-party sellers also own the stock and are responsible for picking, packing and shipping orders, removing a host of costs and inventory risk from boohoo’s operations.

"Given the pace and scale of the turnaround at PLT, which has driven a sharp improvement in profitability, the group’s changed its mind and decided to hold onto the asset for now. Despite the progress at group level, boohoo isn’t out the woods yet. Retail is a fiercely competitive space, and there are plenty of key customer metrics that need to start trending in the right direction again before investors can get too excited."

boohoo will provide its financial results for the year to 28 February in March.

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