Shein Posts Quarterly Loss Before IPO
Synopsis
The retailer blamed U.S. tariff changes and a one-off charge as it prepares for its Hong Kong market debut.
Key Highlights
- Shein recorded a US$99 million loss in the first quarter before the Hong Kong IPO.
- The removal of the US de minimis duty exemption has affected sales and raised costs, the company said.
- According to Shein, comparable steps in the European Union could have an equal or greater influence on its business.
According to Shein’s pre-IPO filing for a planned Hong Kong listing, Shein reported US$99 million in losses in the first quarter of 2026, compared with a US$395 million net profit just one year earlier.
The online fashion retailer said the loss was due to slower sales post-removal of an exemption from US import duty for small packages and a one-time accounting charge of US$328 million.
The filing forms the groundwork for investor roadshows and bookbuilding ahead of Shein’s Hong Kong IPO. The company did not disclose the size, pricing, timetable or anticipated proceeds of sale.
Tariffs Hit Sales and Growth
Since the end of the US de minimis exemption in May 2025, sales in the United States and its largest market, as well as overall growth and expense recognition worsened. The regime used to let packages costing less than US$800 enter the US without paying duty.
The company said Chinese origin products imported to the US are now subject to tariffs ranging from 10% to 87.5%. The company is weighing various measures to mitigate part of the increase in costs, including raising prices on some products in the US market.
First-quarter US revenue dropped 14.3% to US$2.04 billion from US$2.38 billion in the same period a year earlier. The US represented 22.5% of quarterly revenue, which decreased from 29.4% of annual revenue in 2023.
It also warned about the EU’s new €3 low-value e-commerce import rules, which threaten to have an impact similar to or worse than that seen in the US. A large portion of Shein’s revenue came from Europe, which represented roughly one-third in 2025.
IPO and Financial Performance
After an unsuccessful listing in New York and London, Shein received approval from the China Securities Regulatory Commission (CSRC) on 10 July to go ahead with its Hong Kong listing.
Shein is reportedly targeting a valuation of between US$40 billion and US$50 billion, Reuters reported this month, against the US$100 billion market cap it was said to have received in funding last year.
Net income dropped 38.7% to US$2.06 billion in 2025, and revenue increased 8% to US$41.85 billion after a deceleration from 20.7% growth in 2024. The operating margin also fell from 3.9% a year earlier to 2.9% in the first quarter.
Regulatory Scrutiny
About 90% of its 2025 net revenue was generated by products stored in a Chinese central warehouse and shipped out from there.
The company has been criticised over the working conditions for suppliers, elements of its shopping app and air freight’s environmental impact. For their part, Shein has said it has a zero-tolerance policy on labour abuses and invested in risk assessment and mitigation frameworks.
Proceeds from the IPO will go to upgrade technology, raise brand awareness, expand internationally and advance social responsibility efforts among other corporate purposes, according to the company.
Founder Sky Yangtian Xu is named chairman and CEO in the draft prospectus. The company did not include former executive chairman Donald Tang among its directors or senior management.
Source: Reuters
The retailer blamed U.S. tariff changes and a one-off charge as it prepares for its Hong Kong market debut.
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