Shein releases draft prospectus for Hong Kong listing ahead of planned IPO

That old chestnut, Shein‘s stock market listing, might soon become a reality. Last weekend, the online fast-fashion giant filed a draft prospectus for a Hong Kong stock market listing, so that prospective investors could assess Shein’s business model.

Shein, originally set up in China, is usually extremely coy about its financial results, and an expert at being selectively transparent about its business. However, despite the fact that part of the 463-page document was redacted, Shein did have to provide some details about both its revenue and its plans. Of course, in no way does the document go into the details of Shein’s negotiations with its 7,500 subcontractors, almost all of them based in China, nor of where exactly they are in the country. But the prospectus paints the picture of a business whose revenue grew from $32.1 billion in 2023 to $41.8 billion in 2025.

Last year, revenue in Europe for Singapore-based Shein increased to $14.8 billion (35.4% of total revenue, making Europe Shein’s largest market), while sales in the US recorded a modest drop to €10.1 billion, following the Washington administration’s protectionist measures. Sales in the rest of the world instead soared to $16.6 billion. Shein has been clearly impacted by the US and Europe’s trade policies. Net income fell from $3.36 billion in 2024 to $2.06 billion in 2026. In Q1 2026, Shein recorded another revenue slump in the US, while revenue in Europe increased from $1.84 billion to $1.91 billion. The group has clearly developed a strategy to deal with American and European trade policies, concentrating its efforts on other markets. Sales to the rest of the world have increased from $3.73 billion to $4.1 billion. Notably, Shein’s bottom line went into the red in Q1, when the group posted a loss of $99 million compared to a profit of $395 million a year earlier.

In the prospectus, Shein CEO Sky Yangtian Xu did not gloss over these difficulties, though he presented them as though they have already been factored into the group’s strategy.

Shein stated that “since early 2025, US President Trump has implemented significant changes to US trade policy with China. Amongst other things, the de minimis exemption was terminated for imports from China, effective on May 2, 2025… Currently, the China-origin products purchased from us or through our marketplace and shipped to the US have become subject to tax rates ranging from 10% to 87.5% (up from previous rates of 0-62.5%) … 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… Since May 2025, the removal of the US de minimis exemption has had an adverse impact on our sales in the US and the overall growth of our net revenues, and has contributed to an increase in our fulfilment expenses as a percentage of net revenues, although we have since observed signs of normalisation in consumer purchasing behaviour and sales trends in the US.”

Last year, the new policies introduced by the European Union did not have a major impact on Shein’s business, although accusations such as those made in France forced the group to tweak its policies in terms of quality control and type of products sold. But an impact is likely to be felt in the second half of the year, given the new €3 customs duty introduced from the beginning of July for products sourced outside the EU, and that an additional EU-wide administrative handling fee is scheduled to take effect in the second half of 2026.

Shein indicated that “these measures will increase the relevant costs and expenses associated with the sales in the EU. Similar to the US market, we expect to pursue a wide range of options in response to developments in the EU, including increasing our prices to offset a portion of the increased costs. Our directors are of the view that there might be a short-term adverse impact on our sales volume in Europe as we increase prices to offset a portion of the increased costs, while the long-term impact remains too early to fully assess… It is possible that the impact felt in the EU will be broadly in line with or greater than the impact observed in the US.”

However, the risks existing in Shein’s two main markets, accounting for more than half of its revenue (with apparel generating a share of over 61% of total revenue), are not denting the group’s growth plans. Shein said it rents 4.4 million square metres of warehouse space for its products, and that its strategy is to deploy local execution centres to try to better manage customs duties-related costs. The group also said it is spending “significant” amounts of money to contribute to extended producer responsibility regulations.

Planned growth to 2030

Above all, Shein is keen to attract investors, and the prospectus underlined its market potential. The first key element is that Shein claims to have a customer base of 281 million individuals, with order numbers constantly on the up. Emphasising its own tech know-how, Shein indicated that the e-tail market will continue to expand in the coming years. The group noted that “the growth in the global economy and consumption expenditure has propelled the global fashion market, encompassing apparel, footwear, and accessories, into a massive market worth $1.7 trillion in 2025, which is expected to further increase to $2.0 trillion in 2030…  Empowered by technology and agile supply chains, digital-first fashion players are offering curated shopping experiences that drive engagement and loyalty. The online fashion market grew from $522 billion in 2021 to $606 billion in 2025, and is expected to further increase to $792 billion in 2030… Leveraging our leadership in the global fashion market, we have successfully expanded into other categories such as home and living, beauty and personal care, and appliances and electronics products, amongst others.”

A stock market listing is set to enable Shein to invest in acquiring new customers and, primarily, in the technologies that will strengthen the group’s supply chain and expand its product assortment. Perhaps also to make new acquisitions, as Shein recently did with Everlane.

Shein also said it intends to expand its range of services, signalling it has put its expertise at the disposal of brands and third-party players outside its ecosystem with the Shein Xcelerator programme. Of course, the prospectus emphasised how the programme has boosted other brands’ performances, but it is also a winner for Shein itself, contributing a 14% share of revenue.

“Providing these brand support services also means improved profitability for [Shein], since the operating margin of this business is approximately twice as high as the group’s overall operating margin,” said Shein. The opportunity behind Shein’s stock market listing might then be pivoting the group towards a business model that will make it less exposed to international uncertainty.