Shein IPO hits another hurdle as company value slides

Ahead of its planned IPO on the London Stock Exchange (LSE) Shein is under pressure to cut its valuation from US$60bn to “about $30bn” following a reported near-40 percent drop in profit. 

According to documents seen by the Financial Times, Shein's profits dropped to $1bn in 2024, a decline of almost 40 percent. This was despite sales for the full year increasing by 19 percent to reach $38bn but falling short of projections. 

According to targets shared with investors in 2023, Shein expected to post a net profit of $4.8bn last year and $45bn in sales, continuing the strong performance it recorded in 2023 after profits more than doubled year on year to reach $2bn. As a result, potential investors and stakeholders are questioning whether Shein can sustain its current valuation. 

The hurdles facing Shein’s IPO ambitions 

The news follows a bumpy few months for the fast-fashion giant, which included a headline-making hearing on workers rights before the UK's cross-party Business and Trade Committee in January. 

When Shein’s general counsel for EMEA could not answer questions on where the company sources its cotton from, it was accused of "wilful ignorance" over forced labor in its supply chain. Shein later followed up with a written statement, which said it only sources cotton from “approved regions”, which do not include China, for products sold in its biggest market, the US. 

Before this, Shein sought approval from UK regulators to offer less than 10 percent of the company on the LSE, reducing the value of its IPO to $6.6bn. Although lower than intended, at this value Shein would still dwarf Puig's $2.9bn flotation in 2024, the biggest European IPO of that year.

Shein has also been hit by Donald Trump's closure of “de minimis” import rules this month, which removed the loophole that allows Shein (and other B2C Chinese ecommerce sites, such as Temu) to ship ultra-low-cost products – in potentially large volumes – direct to consumers, without incurring duty charges. Germany has also announced similar plans to close a similar loophole. This move threatens any plans for an IPO as it could drastically impact sales and, therefore, profitability.  

However, as the FT reports, profitability is already taking a hit, even though sales – for now – remain strong. 

If Shein’s IPO doesn’t go live within 12 months of documents first being submitted to regulators in June 2024, new documents will need to be filed.

The story of Shein’s IPO 

Shein has been attempting to list on the stock market since 2023. Its first attempt to list on the New York Stock Exchange (NYSE) was met with regulatory scrutiny from the US around its supply chain, specifically the source of cotton used in some of its products, its labor policies and ties with China.

It then turned attention to the LSE, which could benefit from such a significant IPO. The government delegated regulatory approval to the Financial Conduct Authority (FCA) and UK business secretary Jonathan Reynolds assured investors – and critics – that the FCA would enforce “the highest standards” during its approval process. 

Shein started to court investors for its LSE listing back in November 2024 and it was reported the IPO prospectus was being circulated “among select stakeholders”, ahead of its wider release. However, since then Shein’s IPO ambitions have faced a number of obstacles, as outlined above. 

What customers think of Shein 

Despite the scrutiny from regulators and mounting pressure from investors, Shein remains incredibly popular among its target market: young adults looking for the latest fashion at the lowest prices. 

According to ECDB, Gen Z and Gen Y consumers are the “most aware” of Shein (at 83 percent and 77 percent respectively), while Gen Z are its most frequent users. This target market appears to be immune to Shein’s many scandals.

Shein has been accused of copyright infringement, forced labor and “scandal washing”. It is also increasingly called out for producing up to 10,000 products a day, a rate so high that Shein is often categorized as “ultra fast fashion”. Not only does this high volume contribute to a global throw-away-culture that sees billions of items of clothing sent to landfill each year, but manufacturing processes drive up CO2 emissions and have also been linked to the use of harmful dyes and hazardous chemicals. 

For its part, Shein says it conducted more than two million product safety tests in 2024 in collaboration with Intertek, SGS, Bureau Veritas (BV) and TÜV, as well as a CNAS-accredited laboratory. It says the tests are part of “reinforcing its ongoing commitment to ensuring high standards in product quality and consumer safety”.

In 2025, Shein says it plans to invest more than $15mn to “further strengthen its product safety testing and compliance protocols”.

However, hitting customers’ wallets could prove to be the final straw. Recent developments in the US mean the next test for Shein is whether its largest customer base is loyal enough to continue to buy its goods when prices inevitably rise due to new import duty rules.

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