Shein profits slump in fresh challenge to long-planned London IPO

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Shein’s profits dropped by more than a third last year, adding to the fast fashion group’s challenges ahead of a long-planned flotation that would be one of the biggest on the London stock exchange this decade.

The Singapore-based group’s net profit shrank by almost 40 per cent to $1bn in 2024 as it suffered a difficult final quarter and battled competition from rival Temu, two people with knowledge of the matter told the Financial Times.

Sales for the full year increased by 19 per cent to $38bn, according to the people, one of whom added that the figures were from internal projections ahead of finalised accounts.

As a private company, Shein does not publish profit guidance but the 2024 figures were far lower than the $4.8bn in net profit and $45bn in sales the company had projected for 2024 in a presentation to investors in early in 2023, which was seen by the FT.

Shein did not respond to a request for comment. 

The lower profits highlight Shein’s challenges as it attempts to win regulatory approval for a London listing and navigate geopolitical changes that have put pressure on its valuation.

Shein was valued at $66bn during its most recent funding round in 2023 but some investors and other stakeholders are pressuring the group to cut its valuation to about $30bn, according to two people familiar with the situation, a move that could help it to complete an initial public offering in the first half of this year.

Shein, which ships cheap garments made in Chinese factories directly to shoppers around the world, previously told investors that a listing could happen as soon as April, according to people with knowledge of the discussions.

But an IPO could now be pushed into the second half of this year following US President Donald Trump’s decision to tighten a tariff exemption used by Shein when it sells to American customers, according to two people familiar with the process.

Trump this month ended the de minimis rule that allows packages worth less than $800 to be imported into the US without incurring duties. He also hit Chinese goods with an additional 10 per cent tariff.

Implementation of the de minimis change is on hold but analysts expect it to drive prices higher for the goods sold by Shein and Temu.

A delay to the IPO into the second half of the year would force the company to refile fresh documents with UK regulators.

Shein filed confidential IPO paperwork with British regulators last year before the introduction of new UK listing rules. However, a transitional period for completing IPO processes that kicked off before launch of the new rules is set to end in July.

Refiling would be a largely procedural step, said three senior UK corporate lawyers, but the prospect that the company would miss the window for relying on its original filing highlights how its efforts to list have dragged on. 

Shein first launched plans to go public in New York in late 2023 but pivoted to the UK after being spurned by the US Securities and Exchange Commission. Its listing has become bogged down amid uncertainty about whether it will receive approval from regulators in London and Beijing.

The fall in profits at Shein comes as the group battles competition from Temu, which has replicated its model of shipping cheap Chinese-made goods to shoppers overseas. Temu has won over some of Shein’s suppliers in China while the competition has also driven up Shein’s air freight costs and marketing spending.

In late 2023, Shein responded to Temu’s threat by briefly diversifying beyond fashion, which The Information previously reported eroded Shein’s profitability. Shein has since refocused on its core business.

Shein has ploughed money into lobbying efforts in western capitals from Washington to London, including hiring Trump loyalist Kash Patel to be a consultant for its parent company Elite Depot. Patel stepped down as a consultant ahead of his recent confirmation as FBI director but has retained shares in the company, which are worth between $1mn and $5mn.

Additional reporting by Ivan Levingston