Shein, the fast-fashion retailer, reported a net loss of $99 million in Q1, attributing it mainly to a drop in convertible share value. This disclosure, part of its plans for a Hong Kong IPO, highlights the impact of US and EU trade tensions on its business. Revenue from the US market has decreased from 30% in 2023 to 22% in 2026, as tariffs and increased operational costs have affected profit margins. Shein is exploring price increases to mitigate costs and has faced scrutiny from the EU over product legality. Despite attempts to diversify supply, it remains reliant on Chinese manufacturing.

Accessibility help Skip to navigation Skip to main content Skip to footer

Add to myFT

Get instant alerts for this topic

Manage your delivery channels here Remove from myFT

Shein slumps to loss ahead of planned Hong Kong listing

Fast-fashion retailer flags risk from US and EU trade tensions

A person holds two large shopping bags with the Shein logo at a store opening. Shein has invested heavily in entering new markets as growth slows in the US and trade tensions escalate© Sarah Meyssonnier/Reuters

William Sandlund in Hong Kong and Eleanor Olcott in Beijing

PublishedJuly 27 2026

UpdatedJuly 27 2026

Jump to comments section Print this page

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Shein fell to a net loss in the first quarter as it flagged the risk of US and EU trade tensions on its business, the fast-fashion retailer reported in a filing ahead of its Hong Kong listing.

The China-founded company reported a quarterly net loss of $99mn in a pre-initial public offering filing to Hong Kong’s stock exchange late on Sunday. It said the net loss was “mainly attributable” to a $328mn drop in the fair value of their convertible redeemable preference shares.

The disclosure, Shein’s first since deciding to list in Hong Kong, shows how rising trade barriers from the US and EU have affected the fast-growing retailer as it prepares for a long-awaited IPO.

In May 2025, Washington scrapped a tariff exemption for small packages that Shein had exploited to ship clothing from its factories in southern China directly to customers in the US.

Net profit, which peaked at $3.4bn in 2024, fell to $2bn last year. Net profit margins narrowed sharply from 8.7 per cent to 4.9 per cent over the same period.

“In response to the increased duties and taxes, we are pursuing a wide range of options, including increasing our prices in the US market to offset a portion of the increased costs,” the company said in the filing.

Shein, which relies on air freight to send goods from China, said it had limited the impact of higher oil prices from the war in Iran through its long-term contracts with logistics partners.

The US was Shein’s first major market and where it expanded rapidly during the Covid-19 pandemic, when consumers were forced to shop online.

Since 2023, Shein has invested heavily in entering new markets as growth slows in the country and trade tensions escalate. The US has fallen from 30 per cent of Shein’s revenue in 2023 to 22 per cent this year.

But it is also confronting problems in other markets. This year, the EU launched an investigation into the sale of “illegal products”, including childlike sex dolls.

Shein filed for its IPO confidentially, meaning the document published on Sunday — known as a “post-hearing information pack” — was among the first publicly available pieces of information on the company since its decision to list in Hong Kong.

The company highlighted the risk of escalating trade tensions between China and its major export markets. A rising number of governments, particularly in Europe, are clamouring for more action to stop cheap Chinese imports flooding their markets and challenging their industries.

Shein remains heavily dependent on Chinese manufacturers for most of its products, despite attempts to diversify its supplier base in other countries, notably Turkey.

It had previously looked to list in New York or London but was stymied by risk disclosure requirements relating to the alleged use of forced labour in the western Chinese region of Xinjiang.

Shein has publicly stated it has “zero tolerance for forced labour” and requires “our contract manufacturers to only source cotton from approved regions”, without making explicit references to Xinjiang.

Sunday’s document similarly referred to potential “negative publicity regarding production methods” of supply chain partners, without mentioning Xinjiang, reflecting the fine line Shein has to tread in meeting western supply chain standards while satisfying Beijing’s expectations of corporate patriotism.

Reuse this content(opens in new window) CommentsJump to comments section

Follow the topics in this article

Trump tariffs

Add to myFT

Retail sector

Add to myFT

Global trade

Add to myFT

IPOs

Add to myFT

Corporate earnings and results

Add to myFT

Comments

Close side navigation menu

Search the FTSearch

Subscribe for full access

Read Original at Financial Times →