Shein Reports $99 Million Quarterly Loss Ahead of Hong Kong IPO

Shein swung to a $99 million net loss in the first quarter of this year, according to the draft Hong Kong listing prospectus of the online fast-fashion retailer, as its sales took a hit from the Trump administration's removal of the "de minimis" duty-free policy. The filing lays the groundwork for investor roadshows and official bookbuilding of Shein's much-awaited global offering.

The Numbers

The company posted net income of $395 million in the same quarter a year earlier, marking a sharp swing into loss territory. Revenue, meanwhile, still grew — rising 1.1% to $9.05 billion from $8.95 billion.

What's Driving the Loss

Two main factors dragged Shein into the red:

1. Lost US tariff exemption. The "de minimis" rule had allowed packages worth less than $800 to enter the US without import duties, but Shein says China-origin products it sells or hosts on its marketplace and ships to the US are now subject to tax rates ranging from 10% to 87.5%.
2. A one-time accounting charge. The quarter's loss was also driven by $328 million in fair-value losses on convertible redeemable preferred shares — investor shares that can later convert into ordinary shares, whose accounting value can shift ahead of a listing.

Adding to the pressure, the European Union — another key market for Shein — this month imposed a €3 fee on low-value e-commerce imports, a move the EU says is meant to curb unfair competition from Chinese retailers.

The Path to a Hong Kong Listing

The Singapore-headquartered company, originally founded in China, did not disclose the size of the Hong Kong share sale, the offer price, the listing timetable, or expected proceeds in the draft prospectus. Shein won approval from the China Securities Regulatory Commission for the Hong Kong listing on July 10, clearing the way for a listing after earlier attempts to go public in New York and London both fell through.

Leadership Notes

The filing listed founder Sky Yangtian Xu as chairman and chief executive. Donald Tang, who had served as executive chairman, was not listed among Shein's directors or senior management. Goldman Sachs, Morgan Stanley, and JPMorgan are joint sponsors of the listing.