Shein's profit plummets ahead of London IPO plans

In 2024, the online fast-fashion retailer Shein faced significant economic challenges, with its net profit decreasing by nearly 40% to $1 billion, according to a report by the Financial Times. The company experienced this decline as it geared up for a planned initial public offering (IPO) on the London Stock Exchange. Internal projections indicated a stark contrast with previous expectations, as Shein had forecasted a net profit of $4.8 billion and sales of $45 billion for the same year. Instead, Shein's sales grew by 19% to $38 billion, marking a notable divergence from its earlier predictions. In light of the decreased profits, Shein was reportedly under pressure to cut its expected valuation for the IPO. Concerns grew that the valuation might be reduced by nearly a quarter from about $50 billion to possibly as low as $30 billion. This valuation adjustment stems from various market pressures and economic factors that are currently influencing the retail sector, particularly the fast-fashion industry, which is known for its volatility and rapid changes in consumer preferences. Moreover, the company faced additional hurdles when U.S. President Donald Trump announced plans to end a tax exemption that Shein had previously benefited from, further affecting its profit margins and pricing strategies in the U.S. market. This development has led analysts to predict that the planned IPO could be postponed to the latter half of 2025, as Shein navigates these financial challenges and strategizes its approach to the public offering. Overall, these economic strains present a complex landscape for Shein, as it must balance growth aspirations against the backdrop of declining profits and changing external conditions. The impending IPO and these financial issues could dictate the future direction of the company as it seeks to solidify its status in the competitive fashion retail market, especially within a challenging economic environment.