Wealth Club chief investment strategist Susannah Streeter believes the “underlying picture is looking less flattering” for Shein despite the news it could be valued at up to 27 billion US dollars (£19.8 billion) ahead of its stock market debut in Hong Kong.
The online retail giant, known for selling extremely cheap clothes, is due to make its long-awaited bow next week, but is thought to be valued far less than originally hoped for by the group. It was valued at $100bn back in 2022.
Streeter believes the pressure is already showing for the company.
She said: “Shein swung to a $99million loss in the first quarter, compared with a $395m profit a year earlier, as sales slowed and costs rose.
“Although the loss was also heavily affected by a $328m fair-value accounting charge on convertible preferred shares, the underlying picture is looking less flattering, with sales growth slowing and the US, its biggest market, taking a particular hit.”
Streeter believes the removal of tariffs could be to blame, which have specifically affected businesses that utilise ultra-cheap clothing models, with narrowed price gaps and increased competition as a result.
She added: “The removal of the US de minimis tariff exemption, which allowed low-value parcels to enter the country without import duties, has hit Shein and rival Temu particularly hard.
“The EU is also introducing new charges on low-value parcels, while the UK is further down the road but still planning to tighten its small-parcel customs regime, including removing the current £135 customs duty relief.
“That could gradually narrow the price gap between Shein and high-street rivals such as Primark and H&M, taking some of the sparkle out of its ultra-cheap offering.”
Shifting consumer habits and regulatory issues are also thought to have had a hand in Shein’s most recent valuation.
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