Shein Goes Public Tomorrow as It Faces the Challenge of Making €10 Dresses Shipped ...

NEWS Shein Goes Public Tomorrow as It Faces the Challenge of Making €10 Dresses Shipped from China Profitable LAURA DE LA QUINTANA Updated 08/31/2026 - 04:35 ET Share on Facebook Share on X Send by email She aspired to snatch the throne from Inditex, but its valuation has deflated in recent years, to 23 billion euros. Tariffs on its cheap products eat into its profit, which has fallen by 25% in three years. Its selling point is being the 'new global manufacturer' for other brands Shein. EM The speed at which Shein encourages its customers to complete purchases has been a stumbling block in its stock market debut. It has taken about three years to finally go public after being announced as the main competitor to Inditex, the Spanish owner of Zara and the world's largest 'prêt-à-porter' fashion company. It's interesting how expressions related to fast food also apply to fashion companies. Shein, well-known in Europe - its main customer base - is the epitome of 'fast fashion'. Its average order - never disclosed - consists of a higher ticket than Zara's customers, according to various industry reports, but with many more items. Until a few years ago, it clearly benefited from tariff laws that exempted low-cost orders (below $100 or €150) from border fees. Now the reality is different and is taking a toll on the Chinese online fashion company. Tomorrow Shein will debut on the Hong Kong Stock Exchange with a valuation of $26 billion (about 23 billion euros) , releasing a limited number of shares (control will remain with its founders), after failed attempts on Wall Street and then in the London market. The new context has led Sky Xu, the current CEO who will become chairman, to acknowledge that the public market debut had to be at substantially lower prices than expected in 2022, when New York was a possibility and Shein's valuation was around $100 billion. It will go public at a quarter of the expected value, dropping to sixth place in the global ranking of clothing chains, behind Inditex, the owner of Uniqlo (Fast Retailing), sportswear brands Nike and Adidas, and Swedish H&M. The company sees the IPO as a way to expand its shareholder base and secure funding. According to Bloomberg , its executives have pitched themselves to investors during the placement roadshow as an Amazon Web Services for fashion creators and brands, offering services from 7,500 suppliers and manufacturers and their supply chain. It has shifted from being a brand to aiming to become a major supplier. It currently has around twenty brands and last May acquired the American chain Everlane for about 70 million euros with the aim of increasing the average purchase value of its customers and capitalizing on the brand's sustainable profile. However, US authorities have put this operation on hold for national security reasons, and it is still pending resolution. Shein, part of the controversial and criticized textile industry, has been involved in various scandals in recent years related to the composition of its products, labor exploitation issues, worker rights, or customer data breaches. Nevertheless, the company faces the future with the challenge of being well received by investors with a business model in full transformation. "We set out to make fashion more accessible and affordable. To achieve this, we started with a direct-to-consumer online business model. Over the years, we have developed our own infrastructure to drive the growth of our fashion brands," begins the brochure presented to the Hong Kong Stock Exchange authorities, spanning several hundred pages. The figures Shein presents in the document speak of a booming online fashion industry, with an annual growth of 3.4% until 2030, surpassing the previous five years. According to its estimates, by that year almost 40% of textile industry sales will be made online, amounting to around $792 billion, compared to the $1.2 trillion offline industry . "Fashion consumption has undergone a tectonic shift towards online (...) Digital native consumers see it as a form of expression, as a way to stand out. With the omnipresence of social networks, which amplify trends and spread the deepest desires to get the latest look, consumer preferences have also accelerated, requiring a constant update of styles," it explains. The IPO comes fourteen years after its inception, not counting the previous four when the initial sketch of what is now Shein was a company based in China specializing in wedding dresses. The fast fashion giant started in 2012, a year later adopting the name 'Shein', an acronym for 'She inside', and in 2014 began operating fully under the laws of the Cayman Islands, considered a tax haven by the Spanish Tax Agency. The company has subsidiaries worldwide, in China, Singapore, the US, Ireland, the UK, and the United Arab Emirates. Its projection is such that today Shein is present in 160 markets and has 273 million active users , according to its figures. Over the past three years, the number of consumers has grown at an annual rate of 21%, from 186 million in 2023. It has 7,500 manufacturers. And although almost all its production is in China, Europe is its main market, accounting for 32% of sales, followed by the US at 22%. The rest is distributed internationally, but China does not hold a prominent position. However, it is the origin. Of the group's 17,751 employees, almost 80% are located there, mainly in production and manufacturing roles. The issue is that Shein, poised to compete with Inditex for the capitalization throne, has deflated over time. The reason behind this is its figures, which reveal how costs are increasing, partly due to tariff impositions. Among the risks listed in all IPO prospectuses, Shein explains how the European Union, following the US's lead, ended the tariff exemption for orders under 150 euros for non-EU products. This came into effect on July 1 and now imposes a 3 euro fee per order. "These measures will increase sales costs and expenses in Europe (...) Like in the US, we are considering different responses such as raising prices" to offset these cost increases, the company states. Other risks mentioned include lawsuits accusing them of intellectual property infringement or reputational issues related to workers or clothing manufacturing within an already scrutinized textile industry. As a result, despite a 30% increase in sales from 2023 to 2025, Shein's net profit is decreasing due to rising costs. Last year, it reached nearly $41.85 billion in sales (about 35.9 billion euros), while its net earnings were $2.064 billion (1.77 billion euros), 25% lower than in 2023. Back then, its profit margin was 8.7%, which has now dropped below 3%. In comparison, Inditex maintains margins close to 20%, with a net profit of over 6.22 billion euros in 2025, more than triple that of Shein, despite having very similar sales figures. Within its expenses, Shein invests heavily in advertising, local influencers... This accounted for 15% of its costs, totaling around $6.2 billion last year. The shift in strategy, from a direct brand to a service provider for other brands, reflects the challenges in the fashion world to grow. The reality is that it is a highly fragmented sector. It is estimated that the top twenty companies hold a 20.5% market share . Shein is the third-largest company, according to the IPO document, with a 1.9% share, behind the US-based Nike at 3% and Inditex at 2.5%. Adidas and the Japanese Fast Retailing, owner of Uniqlo, rank fourth and fifth. Shein reveals, for example, that polyester is its main raw material . It represents about 83% of the group's commodity basket and originates from China. One of its goals for 2030 is to have 30% of this synthetic fiber recycled, tripling the current figure in four years. The executives of Shein, who reject the definition of 'fast fashion', lead a business model that had a showcase of 2 million clothing items at the end of the first quarter of the year, with an average of 4,700 new products per day. This is not to mention other business lines such as home decor, beauty, footwear, or accessories, which will play a very relevant role for the industry in the near future. Meanwhile, facing the bell toll, Shein's most immediate reality involves deciphering how it will be able to sustain the profitability of sending a dress sold for 10 euros to the other side of the world amidst the trade war initiated by the US and while conflicts in the East affect the transportation of goods. 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