Shein posted a loss ahead of its Hong Kong IPO. Revenue growth has slowed.

Shein, an Asian online retailer of inexpensive T-shirts and other clothing, posted a loss of nearly $100 million in the first quarter of 2026, compared with a profit a year earlier. Sales at the Chinese-based online retailer slowed after the U.S. eliminated its tax exemption for small packages, and the result was further worsened by a one-time accounting revaluation.

Shein filed its IPO prospectus in Hong Kong, in which it disclosed its financial results for the first quarter of 2026: a net loss of $99 million, compared with a profit of $395 million in January–March of last year.

The loss is partly due to an accounting adjustment: Shein recorded a one-time expense of $328 million resulting from the revaluation of investors’ preferred shares with conversion and redemption rights. These securities may subsequently be exchanged for common stock, and their valuation in the financial statements may change prior to listing, according to Reuters.

Shein's sales growth in 2025 slowed to 8% ($41.85 billion) from 20.7% a year earlier. Net income fell by 38.7% to $2.06 billion, and its share of revenue dropped to 4.9% from 8.7% in 2024.

In May 2025, the U.S. eliminated the exemption that allowed duty-free imports of packages valued at less than $800. Shein had been using this exemption to ship clothing directly to customers from factories in China. Now, goods of Chinese origin that the company or sellers on its platform ship to the U.S. are subject to tariffs ranging from 10% to 87.5%. According to Shein, the repeal of the exemption has hurt sales in the country and the company’s overall growth rate.

"In response to the increase in tariffs and taxes, we are considering various options, including raising prices in the U.S. market to offset some of the increased costs," Shein said.

The United States was Shein’s first major market and remains its largest. During the pandemic, the retailer grew rapidly as shoppers were forced to order goods online. Recently, Shein has been actively expanding into other markets: the company now sells clothing in approximately 160 countries, and the U.S.’s share of its revenue has fallen from 30% in 2023 to 22% in 2026, according to the Financial Times.

The situation for Shein became more complicated in July 2026: to combat unfair competition from China, the European Union imposed a €3 levy on low-cost goods purchased from foreign online stores. In 2025, Europe accounted for about one-third of the retailer’s revenue.

"Although it is still too early to draw definitive conclusions, the impact of the changes in the EU could be comparable to—or even exceed—the consequences of the elimination of the small-package exemption in the U.S.," Shein warned in its prospectus.

China remains Shein’s logistics hub. Most products are sent to central warehouses in the country before being shipped to customers, and in 2025, products stored there accounted for more than 90% of the company’s revenue.

Shein’s problems aren’t limited to trade restrictions. In 2026, the EU launched an investigation into the sale of allegedly illegal goods, including sex dolls with childlike appearances. Shein has been criticized by competitors, regulators, and advocacy groups for working conditions at its suppliers’ factories, its shopping app—which critics say is addictive—and the environmental impact of its massive air freight operations, Reuters reports.

Shein filed its IPO application confidentially. Therefore, the prospectus published by the retailer after the Hong Kong Stock Exchange reviewed its application has become one of the first publicly available sources of information about the company since it chose Hong Kong as its listing venue, the FT notes. The company has not yet disclosed the size of the offering, the share price, or the timing of the listing, Reuters reports.

Shein received approval from the China Securities Regulatory Commission for its Hong Kong listing on July 10. The retailer named Goldman Sachs, Morgan Stanley, and JPMorgan as the underwriters for the offering. The prospectus lists IDG, Sequoia Capital, HongShan, Tiger Global, Boyu, Brookfield, and General Atlantic as Shein’s investors.

Shein was prevented from holding an IPO in New York and London due to disclosure requirements regarding risks associated with the alleged use of forced labor in Xinjiang in western China, the FT reports. The retailer itself has stated that it maintains a “zero-tolerance” policy toward forced labor and requires its contractors to source cotton only from approved regions.

Xinjiang is not mentioned in the documents for the Hong Kong listing: Shein merely warns of the risk of “negative publicity due to the production methods” of its suppliers. “Shein has to strike a delicate balance: meeting Western supply chain requirements while also meeting Beijing’s expectations that businesses demonstrate patriotism,” the FT concludes.

This article was AI-translated and verified by a human editor