Shein slumps to loss ahead of planned Hong Kong listing

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Shein fell to a net loss in the first quarter as US and EU trade tensions hit its business, the fast-fashion retailer reported in a filing ahead of its Hong Kong listing.

The China-founded company reported a quarterly net loss of $99mn in a pre-initial public offering filing to Hong Kong’s stock exchange late on Sunday. Net profit margins narrowed sharply to 4.9 per cent in 2025 from 8.7 per cent in 2024.

The disclosure, Shein’s first since deciding to list in Hong Kong, shows how rising trade barriers from the US and EU have hit the fast-growing retailer as it prepares for a long-awaited IPO.

In May 2025, Washington scrapped a tariff exemption for small packages that Shein had exploited to ship clothing from its factories in southern China directly to customers in the US. Net profit, which peaked at $3.4bn in 2024, fell to $2bn in 2025.

“In response to the increased duties and taxes, we are pursuing a wide range of options, including increasing our prices in the US market to offset a portion of the increased costs,” the company said in the filing.

Shein, which relies on air freight to send goods from China, said it had limited the impact of higher oil prices from the war in Iran through its long-term contracts with logistics partners.

The US was Shein’s first major market and where it expanded rapidly during the Covid-19 pandemic, when consumers were forced to shop online.

Since 2023, Shein has invested heavily in entering new markets as growth slows in the country and trade tensions escalate. The US has fallen from 30 per cent of Shein’s revenue in 2023 to 22 per cent this year.

But it is also confronting problems in other markets. This year, the EU launched an investigation into the sale of “illegal products”, including childlike sex dolls.

Shein filed for its IPO confidentially, meaning the document published on Sunday — known as a “post-hearing information pack” — was among the first publicly available pieces of information on the company since its decision to list in Hong Kong.

The company highlighted the risk of escalating trade tensions between China and its major export markets. A rising number of governments, particularly in Europe, are clamouring for more action to stop cheap Chinese imports flooding their markets and challenging their industries.

Shein remains heavily dependent on Chinese manufacturers for most of its products, despite attempts to diversify its supplier base in other countries, notably Turkey.

It had previously looked to list in New York or London but was stymied by risk disclosure requirements relating to the alleged use of forced labour in the western Chinese region of Xinjiang.

Shein has publicly stated it has “zero tolerance for forced labour” and requires “our contract manufacturers to only source cotton from approved regions”, without making explicit references to Xinjiang.

Sunday’s document similarly referred to potential “negative publicity regarding production methods” of supply chain partners, without mentioning Xinjiang, reflecting the fine line Shein has to tread in meeting western supply chain standards while satisfying Beijing’s expectations of corporate patriotism.