Twenty-Six Billion
Fast-fashion giant Shein raised 1.7 billion dollars in its long-awaited Hong Kong initial public offering, valuing the online retailer at around 26.3 billion dollars, the company said Monday. The Chinese-founded behemoth offered 280 million shares at HK$48.56 apiece, below the maximum announced offer price.
The platform surged in popularity during the Covid-19 pandemic, conquering the global fast-fashion market by catering to young customers through social media. But the company now faces slowing growth and increasing regulatory pressure in Europe and the United States, its largest markets. The 26.3 billion dollar valuation is well below the 98.2 billion dollars it commanded during private fundraising rounds in 2022.
Geopolitical risks
Shein has faced scrutiny over its environmental footprint and allegations of human rights violations, and faces growing competition from Chinese low-cost retailers like Temu and AliExpress. The company recently swung to a 99 million dollar quarterly loss as the United States scrapped an import duty exemption on small packages. The European Union last month imposed a duty of three euros per item for packages valued at less than 150 euros.
"The decline in market perception of Shein reflects slower revenue growth amid a slew of geopolitical challenges as well as increased competition," said Lorraine Tan of Morningstar. "While sales in Asia are helping to offset a fall in US revenue, we're probably looking at a period of single-digit revenue growth for the company."
Founded in China and now headquartered in Singapore, Shein reported a full-year net profit of 2.06 billion dollars last year. Its shares begin trading in Hong Kong on Tuesday.