The downward revision of the valuation is explained, among other things, by a calmer growth rate and increased costs. The company is affected by new regulatory requirements, including the EU's import duty of three euros introduced in July, the abolition of customs exemptions in the USA and increasing competition, particularly from the platform Temu.
Now, industry website Retail Asia, citing analysis firm GlobalData, reports new details regarding the company's financial forecasts and how the proceeds from the listing will be used. Shein has announced to the market that the company's net profit is expected to have reached 2 billion dollars during the past year, almost doubling the 1.1 billion dollars reported in 2024.
The lower valuation, however, may improve the attractiveness of the offering by better aligning expectations with current market conditions, says Sharon Iles, Senior Fashion Analyst at GlobalData, who believes that the profit forecast demonstrates a business model that continues to generate cash flow despite slowing growth.
According to the analysis, Shein plans to use the capital from the listing for investments in logistics infrastructure, AI-driven merchandise planning and an expansion of capacity in the supply chain. Geographically, the company will prioritize expansion in Eastern Europe, the Middle East and South America, markets where the proportion of consumers who shop for fashion online continues to increase.
At the same time, several of the structural challenges to the company's fast-fashion model remain. Competition is increasing not only from other online players, but also from traditional retail companies. These players are considered to have an advantage regarding sustainability thanks to more established programs for regulatory compliance.
Shein continues to face criticism for the lack of comparable independent supplier audits and is regularly accused of unethical working conditions. The success of the listing will therefore be judged on whether Shein can demonstrate sustainable growth and stable margins in a global clothing market with increasing regulations and increased competition, concludes Sharon Iles.