HONG KONG – Shares of fast-fashion retailer Shein tumbled as much as 14% on Sept 29 after it reported a 67% fall in quarterly profit in its first post-IPO results, fuelling investor concerns over margin pressure and slowing growth.
Investors and analysts have been closely watching for signs that growth is moderating from the breakneck pace that propelled Shein’s rapid rise and underpinned its plans for a stock market listing.
“Shein is still growing orders and diversifying across markets, but the scale of the margin compression and the weakness in Europe raise questions over how quickly it can return to a combination of stronger growth and improving margins,” said Jianggan Li, CEO of Singapore-based consultancy Momentum Works.
Jefferies analysts estimated earnings for the quarter ended June 30 came in more than 10% below the low end of the range implied by the China-founded and Singapore-headquartered company’s prospectus.
The share plunge left Shein with a market value of about US$17 billion (S$21 billion) as of the midday break on Sept 29, down from roughly US$26 billion when it went public in Hong Kong on Sept 1.
The stock was down 10.9% at HK$31.44 (S$5.12).
Adjusted net profit was US$228 million for the second quarter and its margin was squeezed to just 2.1% from 6.2% in 2025 as conflict in the Middle East pushed up jet fuel and freight costs for the retailer that sends cheap clothes by air to shoppers around the world.
Sales in Europe dropped sharply after Shein hiked prices and cut online advertising in anticipation of €3 (S$4.36) fees the European Union imposed on low-value e-commerce parcels starting July 1.
Shein chief executive officer and chairman Yangtian Xu said on Sept 28 a key priority was increasing the amount of inventory in Europe and the company plans to push into higher-priced clothes that will boost its profitability.
Known for selling US$5 dresses and US$10 jeans and running permanent discounts, Shein was already forced to raise prices in the US in 2025 when the Trump administration ended de minimis – duty-free access for low-value e-commerce parcels.
Shein has said the European fees could have a bigger impact than the end of de minimis in the US. REUTERS
