Shein, the fast-fashion retailer, recorded a net loss of $99 million in the first quarter of this year, according to its draft Hong Kong listing prospectus. This represents a significant downturn compared to the $395 million net income it posted in the same quarter last year. Revenue for the quarter, however, experienced a slight increase of 1.1%, rising to $9.05 billion from $8.95 billion.
The primary reason for Shein's Q1 loss was the Trump administration's removal of the "de minimis" duty-free policy, which affected sales and increased expenses since May 2025. This policy previously allowed packages valued at less than $800 to enter the U.S. without import duties. Now, China-origin products sold by or through Shein to the U.S. are subject to tax rates ranging from 10% to 87.5%.
Another significant contributor to the loss was $328 million in fair-value losses on convertible redeemable preferred shares. These shares, held by investors, can be converted into ordinary shares later, and their accounting value can fluctuate before a listing. The financial details, disclosed for the first time, highlight the increasing pressures on Shein, including higher costs, slower growth, and heightened regulatory scrutiny in key markets as it seeks new funding.
Shein received approval from the China Securities Regulatory Commission (CSRC) on July 10 for its Hong Kong listing, following unsuccessful attempts to list in New York and London. The prospectus lists founder Sky Yangtian Xu as chairman and chief executive, while Donald Tang, previously executive chairman, is not listed among the company's directors or senior management. Goldman Sachs, Morgan Stanley, and JPMorgan are serving as joint sponsors for the listing.
