Shein's quarterly profit plunges 67% as war-driven freight costs bite; shares slide 6%
Shein's first results as a public company show adjusted net profit down 67% to $228 million, with margins squeezed by Middle East war-driven freight costs and sliding European sales.
Shares of fast-fashion platform Shein (0625.HK) dropped more than 6% on Tuesday after the company reported a 67% fall in quarterly profit in its first results since listing on the Hong Kong Stock Exchange on 1 September.
Adjusted net profit was $228 million for the second quarter, and its margin was squeezed to just 2.1% from 6.2% a year ago as the Middle East conflict pushed up jet fuel and freight costs for the retailer, which ships cheap clothes by air to shoppers around the world.
Jefferies analysts estimated that earnings landed more than 10% below the low end of the range implied by Shein’s prospectus. Fulfilment costs jumped 18.1%, well above Jefferies’ expectations — concerning, the analysts said, given this was before new European fees kicked in.
European sales fell sharply in the quarter to end-June as Shein hiked prices and cut online advertising ahead of the €3 fees the EU imposed on low-value e-commerce parcels from 1 July. Revenue in Europe fell 13.9% to $3.77 billion, while US revenue declined 6% to $2.5 billion. Total second-quarter sales were $11.08 billion, up 0.9% from a year ago, as growth in Latin America offset declines in Shein’s biggest markets.
Since its 1 September debut, Shein’s shares have dropped 27.3% from the offer price of HK$48.56 ($6.19); the stock was trading around HK$33.40 on Tuesday.
Shein chief executive and chair Yangtian Xu said on Monday that a key priority was increasing the amount of inventory in Europe, and that the company plans to push into higher-priced clothes to boost profitability. The company has been investing in warehouse space in Poland, opening a 740,000-square-metre logistics hub in Wroclaw in December 2025, with industrial real estate firm CTP leasing it an additional 66,000 square metres of warehouse space this year.
Sources
- Reuters via Channel NewsAsia: “Shares of fast-fashion platform Shein fall 6% after quarterly profit slides 67%” — https://www.channelnewsasia.com/business/shares-fast-fashion-platform-shein-fall-6-after-quarterly-profit-slides-67-6417151
- DevDiscourse: “Shein quarterly profit falls 67% as costs jump, Europe sales slump” — https://www.devdiscourse.com/article/international/3983460-shein-quarterly-profit-falls-67-as-costs-jump-europe-sales-slump
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