How Shein has lost its shine as flotation nears

It's the ultra-cheap online fast fashion retailer that has taken the world by storm.

But there are now storm clouds hanging over Shein, just as the China-founded firm finally gets its chance to woo investors ahead of a stock market flotation.

We have, for the first time, gotten sight of Shein's financial background, thanks to the publication of the prospectus for the Hong Kong share sale, known as an initial public offering (IPO).

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The document shows an average annual revenue growth rate above 14% since 2023, reaching $41.9bn (£31.4bn) in 2025.

But what is clear from the figures revealed by the company is that higher shipping and marketing costs are now taking a toll on its bottom line.

Net income fell 39% to $2.1bn last year.

Shein recorded a $99m (£74m) loss in its last quarter.

It blamed an accounting charge for falling into the red but also slowing sales following the removal, last year, of a US import duty ‌exemption covering small value packages.

That affected every delivery to US customers as each was shipped from China.

Europe was Shein's biggest market last year but now the company fears a double whammy.

That is because the European Union has just imposed a €3 duty on small parcels imported from outside the trading bloc.

Shein warned it could have a "material adverse effect on our business, financial condition and results of operations".

The UK is planning a similar charge as part of plans to help protect domestic retailers from the deluge of cheap international competition.

The US and Europe currently account for around 60% of Shein's total sales.

The company will be cursing its luck over the crackdown as the protectionist measures follow years of failure in securing an IPO.

It aimed high, floating the idea first in New York in 2022 only to be rebuffed more than a year later.

London also turned up its nose at Shein despite intense pressure for such a listing to help the City reignite lost appetite for listings.

It was forced to turn to Hong Kong, its home market, essentially because it has an image problem.

Concerns among UK and US politicians and regulators included labour practices, design theft and harm to the environment.

Another was, and remains, the scant detail available on Shein's founder and chief executive, Sky Xu.

He is something of a recluse and that contributed to a perceived lack of transparency.

The chair of the business and trade committee of MPs wrote to the London Stock Exchange last year to check on its vetting procedures after representatives of the company were accused of failing to answer the committee's questions related to Shein's supply chains.

Had it listed in New York, Shein had been expected to achieve a $100bn market value.

Now, a couple of years later in Hong Kong, that figure is expected to be cut in half.

Susannah Streeter, chief investment strategist at Wealth Club, said the impact of Donald Trump's trade war was clear to see while the EU's new barriers were an additional burden.

"The removal of the US de minimis exemption has taken away a huge competitive advantage, forcing the retailer to put up prices and absorb higher costs at the same time.

"That's a difficult combination for a business built on razor-thin margins and impulse purchases", she wrote.

The UK's plans to scrap customs duty relief on parcels worth less than £135 aren't due until late 2028.

It may be late to the issue but the wider crackdown on the likes of Shein and Temu is knocking their global ambitions due to their scale.

Shein is yet to reveal details of its IPO but it's clear Western scrutiny has rubbed away the shine Shein once enjoyed ahead of its milestone moment.

(c) Sky News 2026: How Shein has lost its shine as flotation nears