Shein’s Earnings Decline Adds to IPO Uncertainty in E-commerce Landscape

Shein, the Chinese-founded fast-fashion giant, reported a staggering earnings drop of over 70% in the first half of 2024, intensifying uncertainty surrounding its initial public offering (IPO) plans. The e-commerce titan is facing escalating competition from PDD Holdings' Temu and other rivals, as reflected in its recent financial data.

Revenue growth for the Singapore-registered entity slowed to 23% during this period, down significantly from 40% for the entirety of 2023. Notably, profits dipped below US$400 million, marking a sharp descent from the previous year when the company enjoyed a record profit exceeding US$2 billion.

This economic downturn has raised concerns for Shein's IPO trajectory in London, especially after abandoning a prior plan in New York due to regulatory obstacles from US lawmakers. Despite filing paperwork with Britain's market regulator, uncertainty looms as the China Securities Regulatory Commission has yet to comment on the IPO.

Shein's strategy relies on its relationship with manufacturers in China, highlighted by the recent establishment of a supply chain hub near Guangzhou. However, with competition on the rise from both domestic and international brands like Inditex’s Zara, Shein’s market position within the fast fashion sector remains precarious.

In an effort to regain investor confidence, company executives forecast stable sales growth between 20% to 30%, paired with a net profit margin in the mid-to-high single digits.