Shein, a global fast-fashion giant, has reported a quarterly loss of $99 million as its sales slowed in the US following the removal of a tariff exemption by former US President Donald Trump. The company, which has its headquarters in Singapore but was founded in China, attributed the loss to the increased duties and taxes imposed on small packages entering the US.
Shein's Sales Slump: The Impact of Trump Tariffs
Shein's quarterly loss comes as the company prepares for its stock market debut in Hong Kong. The filing did not provide details on the size, timetable, or pricing of the planned initial public offering (IPO). The company's sales in the US have been affected by the removal of the de minimis exemption, which had allowed goods valued at $800 or less to enter the US without paying any tariffs.
War in Iran and Other Factors Contribute to Loss
Shein also cited the war in Iran as a factor that had hit demand, increased costs, and caused delivery delays in some markets. The company reported a paper loss of $328 million due to an accounting change for special investor shares. These shares can be turned into ordinary stock later, and their value can change before a listing.
Shein's Customer Base Remains Strong
Despite the loss, Shein's figures show that it has 281 million active customers – a rise of more than 16% on a year earlier – who placed a total of more than one billion orders. The company's customer base remains strong, but the tariffs imposed by the US and the European Union have had an adverse impact on its sales.
Hong Kong Listing Expected to Take Place in Coming Months
Shein has received approval from the China Securities Regulatory Commission (CSRC) for a Hong Kong share sale after failed attempts to list in New York and London. The Hong Kong listing is expected to take place in the coming months, but the company has not provided any details on the size, timetable, or pricing of the IPO.
What's Next for Shein?
The removal of the US de minimis exemption and the imposition of tariffs by the European Union have had a significant impact on Shein's sales. The company is pursuing a wide range of options, including increasing its prices in the US market to offset a portion of the increased costs. As Shein prepares for its stock market debut in Hong Kong, it remains to be seen how the company will navigate the complex and ever-changing landscape of global trade and tariffs.
Source: Joy Online
