Online fast-fashion platform Shein is aiming for a valuation comparable to industry giants like H&M, emphasizing its distinct business model and extensive global customer base as significant competitive edges. Internal documents provided to the South China Morning Post by investors suggest that analysts believe the market should perceive Shein as a global fashion powerhouse akin to Zara's parent company Inditex and H&M, rather than merely a regional Chinese brand. An unnamed U.S. investment bank projected Shein's net profit to grow at a compound annual rate of 12% between fiscal years 2025 and 2028, surpassing Inditex's 9% and H&M's 4%. Shein's "LATR" model, involving small-batch product testing and scaling through a smart supply chain, achieves inventory turnover cycles of just 36 days, outperforming Inditex's 71 days and Uniqlo parent company Fast Retailing's 114 days. Consequently, Shein believes it deserves a valuation multiple matching or exceeding Inditex's typical price-to-earnings ratio of 25 and H&M's 20.
However, Shein has recently cut its target valuation for its planned Hong Kong IPO. Initially, it aimed for over $30 billion, which would exceed H&M's $26 billion but remain significantly below Inditex's $208 billion. More recent reports indicate Shein is now targeting a valuation around $25 billion for its Hong Kong IPO, with some sources suggesting it could be between $22 billion and $25 billion. This reduction comes amid investor scrutiny and challenges like slowing growth and increased regulatory hurdles.
A prospectus filed in July revealed an 8% rise in revenue to $41.8 billion in 2025, but a 39% fall in net income to $2.06 billion. The company also swung to a $99 million loss in the first quarter of this year. Analysts highlight concerns over Shein's narrowing operating margin, which stood at 2.9%, suggesting a re-pricing of the company from a hyper-growth tech platform to a retail and logistics player. Challenges include the removal of the U.S. de minimis exemption, which has hurt sales growth and increased expenses, and a new fee on low-value imports in Europe, which is expected to have a similar or greater impact. These factors have led to a decline in valuation from $98.2 billion in 2022 to $64 billion after a funding round in 2024, with some experts questioning its ability to achieve a substantial uplift in valuation for its IPO. Industry analysts note that U.S. sales have been contracting since 2025 and European growth is slowing, suggesting future growth will largely depend on "Rest of the World" countries.
