Shein Swings to Quarterly Loss Ahead of Hong Kong IPO

Shein has swung to a $99 million net loss in the first quarter, a significant downturn from the $395 million profit it posted in the same period last year. The online fast-fashion retailer's sales faced headwinds from the U.S. decision to end the "de minimis" duty-free policy, which had allowed packages under $800 to enter the country without import duties. This change now subjects Shein's China-origin products shipped to the U.S. to taxes ranging from 10% to 87.5%, adversely affecting sales and increasing expenses.

The company's filing for a Hong Kong listing revealed the financial details for the first time, offering investors a clearer view of the pressures Shein faces. These include rising costs, slower growth, and increased regulatory scrutiny in key markets. The first-quarter loss was also attributed to $328 million in fair-value losses on convertible redeemable preferred shares, which are accounting adjustments for investor shares before a public listing. Despite the loss, revenue saw a slight increase of 1.1%, reaching $9.05 billion from $8.95 billion in the prior year.

Shein, headquartered in Singapore and founded in China, has received approval from the China Securities Regulatory Commission for its Hong Kong listing. The draft prospectus, however, does not disclose the size of the share sale, the offer price, the listing timeline, or the expected proceeds. Goldman Sachs, Morgan Stanley, and JPMorgan are serving as joint sponsors for the listing. The filing also identified founder Sky Yangtian Xu as chairman and chief executive, with Donald Tang no longer listed among senior management.