Shein Says it Turned a Profit in the First Half
Chinese ultra-fast-fashion e-tailer Shein says it’s profitable, thanks in large part to Brazilian and American marketplace launches.
Since the beginning of the year, the company has sold nearly $100 million in total merchandise in Brazil, where it has 6,000 active marketplace sellers and recently announced plans to invest $150 million in localized production. In a letter to investors, executive vice chairman Donald Tang wrote that Shein is expanding beyond the primary categories of fashion and apparel into appliances and products for home and other areas, according to information first reported by CNBC.
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Tang didn’t provide any specifics on the U.S. marketplace. However, the company plans to start similar marketplace programs in Mexico, Germany, Spain, France and Italy.
Tang said the company’s first-half net profit was its highest ever, versus last year’s near break-even results.
The private company has been the subject of IPO speculation. Reuters reported in June that Shein filed confidentially with the U.S. Securities and Exchange Commission regarding plans to trade on the New York Stock Exchange. A Shein spokeswoman told Sourcing Journal that it “denies these rumors,” but didn’t elaborate further.
Last year Shein was said to be looking at a listing, but Russia’s Ukraine invasion scuppered those plans. New financing this year valued the company around $64 billion—far less than the $100 billion figure thrown around after an investment round in April last year. A spokeswoman told SJ that the company “denies the accuracy of some of the information reported.”
In March Shein raised $2 billion from an investor group led by private equity firm General Atlantic, with participation from existing backers Abu Dhabi sovereign wealth fund Mubadala and venture capital firms Sequoia Capital and Tiger Global Management, among others.
Three years ago it tried to go public too, but ran into a snag when the U.S.-China trade war chilled the markets. And while a third attempt could be the charm for the Christian Siriano collaborator, Shein is facing opposition from congressional legislators and concerned citizens alike
Any Shein IPO shelf registration filed confidentially would be in draft format. That allows the SEC to see if the filing checks all the required boxes before it grants final approval. But a group of U.S. House of Representatives members in May urged SEC chair Gary Gensler not to register Shein until it’s sure the retailer doesn’t exploit the persecuted Uyghur minority that populates China’s cotton-rich Xinjiang region.
In June, a U.S. congressional report on preliminary findings regarding forced labor in the supply chain details human-rights risks at Shein and its competitor Temu. Shein has routinely said that it has “zero tolerance” for forced labor.
The Shut Down Shein coalition accuses the e-tailer of exploiting U.S. customs laws to avoid paying billions in tariffs. Shein spent $600,000 on lobbying activities between April 1-June 30 as lawmakers turned up the heat on the purveyor of low-cost clothing.
Earlier this monnth, Shein was on the receiving end of a lawsuit filed in a federal district court in Los Angeles that alleged it had infringed on certain trademarks belonging to a made-to-order apparel firm. One of the claims was that Shein’s alleged egregious infringement of te plaintiff’s copyrights constituted racketeering under the Racketeer Influenced and Corrupt Organizations Act, better known as RICO.
H&M has also sued Shein over copyright infringement claims in a case lodged with the Hong Kong High Court. Shein is also embroiled in a legal battle with Temu, charging it with trademark and copyright infringement. Temu filed its own lawsuit against Shein alleging anticompetitive conduct.
After all these legal disputes, now Shein is calling on the industry to overhaul of the “de minimis” exemption to sidestep tariffs. Ironically, U.S. lawmakers have accused Shein and Temu of using Section 321 of the Tariff Act of 1930 to avoid paying their full duty bill.
Tang’s letter to the AAFA said “responsible reform of the de minimis exemption” should create a level and transparent playing field where all retailers “play by the same rules, and where rules are applied evenly and equally.”
