Shares of Shein Global Holdings fell as much as 8.6 per cent to a record low after the online fashion retailer reported a 53 per cent plunge in first-half operating income in its inaugural earnings as a public company.
The decline left Shein with a market value of about $17.5 billion as of Tuesday morning, down from roughly $26 billion when it went public in Hong Kong on September 1st. Rising costs and weakening demand squeezed margins, with the deterioration accelerating in the second quarter, the Singapore-based fast-fashion retailer said Monday.
The weak showing compounds a difficult start for Shein as a public company, with revenue growth and profitability deteriorating since last year and putting pressure on executives to reassure investors. Its IPO valuation was a fraction of the roughly $100 billion it commanded at a 2022 peak, and the company had cautioned before listing that the Iran war would weigh on its first-half results.
Jefferies said earnings estimates for Shein in 2026 and 2027 may be too optimistic, as margins will face growing pressure with the European Union eliminating a customs exemption on low-value parcels in July. Second-quarter’s adjusted profit “likely missed consensus by a wide margin”, analysts including John Chou wrote in a note Tuesday.
RM Block
Early indicators suggest the pressure is continuing into the third quarter. US sales fell more than 10 per cent in the three months through August and early September, according to Bloomberg Second Measure, which analyses credit and debit card transactions. Sales have underperformed the broader apparel industry in the US since late last year, while global web traffic has also slowed. - Bloomberg
