Shein’s IPO haste implies an ill-fitting outcome

13 Feb 2025

Shein's ambitious IPO plans are starting to resemble a fashion faux pas as rising tariffs and a shrinking valuation threaten to turn its runway debut into a stumble, leaving bankers scrambling to sell a story that might just be too hard to swallow.

By Aimee Donnellan

Listing a company’s shares is a delicate art. Bankers try to find the perfect time to tap the market, and sell a vision of the company’s future that convinces potential shareholders their investment will grow in value. When it comes to Shein, however, they may have a job on their hands.

The fast fashion group’s executive chairman Donald Tang seems set on listing the company’s shares in the first half of the year, Reuters reported in January. Last year it seemed he only needed to secure the approval of UK and Chinese regulators to sell a chunk of his business, which was valued at $66 billion in a 2023 funding round. The British part of that looked relatively straightforward given the Financial Conduct Authority said in December that Shein would be free to list in London as long as it disclosed any potential legal risks.

Yet since then, the company’s prospects have dimmed. Early this month, US President Donald Trump slapped a 10% duty on goods from China, ending a decades-old “de minimis” provision that exempts items worth $800 or less from duties. Shein and rival Temu look to be disproportionately affected: together they are estimated to have accounted for more than 30% of all packages shipped to the US each day under the arrangement, the US congressional committee on China said in a 2023 report. Last week, Reuters reported that the company may now only be valued at $50 billion as a result.

Tang could argue that Shein can manage these higher costs, by passing them on to customers. But if Shein charges more for its maxi dresses and bikinis, it will be competing with more established rivals like H&M, Primark and US retail giant Target. Greater competition could hurt its ability to drive sales.

Shein’s profits were already becoming less reliable.

The Information reported in October that year-on-year sales growth during the first six months of 2024 tumbled to 23% from 40% the year previous. Meanwhile, its net margin fell from 8% to 2%. Tang told investors late last year that the same metric recovered in the following quarter, but that was before the de minimis bombshell dropped.

The Shein chair has long argued that the company needs a public market presence to gain credibility. But given it’s only intending to sell a stake of less than 10%, the logical approach is to delay any IPO until Shein has proved it can weather the tariff storm. By forging ahead, its bankers might end up trying to sell an IPO story involving their company getting worse before it gets better, necessitating a meaningful discount. Shein may want recognition, but that’s the wrong sort.

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

CONTEXT NEWS

Online fast fashion retailer Shein is set to cut its valuation in a potential London listing to around $50 billion, Reuters reported on February 7 citing three people with knowledge of the matter.

If the IPO were valued at $50 billion it would mark a near-quarter decline versus the company’s 2023 fundraising value.

Shein had been aiming to go public in London in the first half of 2025, assuming it secured approval from regulators in the UK as well as in China, Reuters reported in January.

Editing by George Hay and Oliver Taslic

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