Shein has swung to a £74m quarterly loss after changes to US import rules pushed up costs and dented sales in its largest market.
The company fell into the red during the first three months of 2026, compared with a £295m profit during the same period last year, according to financial information published ahead of its planned Hong Kong stock-market listing.
The loss was partly driven by a one-off £245m accounting charge linked to convertible preferred shares. However, Shein also warned that the removal of America’s “de minimis” import exemption had slowed growth and increased expenses.
The exemption previously allowed parcels worth less than approximately £600 to enter the US without import duties.
The Trump administration removed the exemption for goods from China and Hong Kong in May 2025, subjecting millions of low-value parcels to additional taxes and customs requirements.
US sales tumble
Shein’s US revenue dropped 14.3 per cent to approximately £1.53bn during the quarter, down from £1.78bn a year earlier.
Products originating in China and shipped to American shoppers are now reportedly subject to tax rates ranging from 10 per cent to 87.5 per cent.
Shein is considering further US price rises to recover some of the additional costs, potentially weakening one of its main competitive advantages over established fashion retailers.
The US accounted for 22.5 per cent of Shein’s quarterly revenue, compared with 29.4 per cent of annual sales in 2023.
Its operating margin fell to 2.9 per cent during the quarter, down from 3.9 per cent a year earlier.
European costs mount
Shein could face similar pressure in Europe, which represented roughly a third of its revenue last year.
The European Union introduced a charge equivalent to approximately £2.60 on low-value ecommerce parcels this month as it seeks to tackle what it regards as unfair competition from overseas marketplaces.
Shein warned that the impact in Europe could match or exceed the disruption caused by the US rule changes.
The retailer’s net profit for 2025 dropped 38.7 per cent to approximately £1.54bn despite revenue climbing eight per cent to £31.28bn. Sales growth slowed sharply from the 20.7 per cent increase recorded in 2024.
Shein pushes ahead with IPO
Shein is moving closer to a long-awaited Hong Kong flotation, having abandoned earlier attempts to list in New York and London.
It received approval from China’s securities regulator for the proposed listing on 10 July, although it has not disclosed the size, pricing or timetable of the share sale.
Shein is reportedly targeting a valuation of between £30bn and £37bn, significantly below the approximately £75bn valuation it achieved during a funding round in 2022.
The listing proceeds will be used to invest in technology, expand Shein’s international presence, increase brand awareness and support its corporate responsibility programmes.
However, its weakening margins, rising import costs and mounting regulatory scrutiny are likely to weigh heavily on investors as itE prepares to make its public-market debut.
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