Shein profit slumps as Temu gains ahead of London IPO
Shein’s net profit fell by almost 40 per cent in 2024, raising doubts about its long planned London stock market listing.
Shein’s profits dropped by more than a third last year, adding to the fast fashion group’s challenges ahead of a long-planned flotation that would be one of the biggest on the London stock exchange this decade.
The Singapore-based fast fashion giant reported $1bn in net profit last year, well below its earlier projection of $4.8bn, reported the Financial Times on Sunday.
Despite a 19 per cent rise in annual sales to $38bn, the fashion firm struggled in the final quarter as it faced growing competition from Chinese rival Temu.
The rival company initially aimed for a 2024 IPO in New York, yet switched to London after failing to gain US regulatory approval.
Its listing remains uncertain due to geopolitical tensions and investor concerns over its valuation.
According to a recent report, the fast fashion giant is under investor pressure to slash its valuation by two thirds from its all time high should it go ahead with its float on the London Stock Exchange.
Shein was valued at $66bn in a 2023 funding round, but investors are pushing for a lower valuation of around $30bn to improve its IPO prospects.
Lowering to the “cavernous gap” between Shein’s past and prospective valuation on the stock market gives the IPO a better chance of going ahead, according to two major investment platforms.
“It makes sense that investors want a discounted valuation for Shein before agreeing to back the IPO”, AJ Bell investment director Russ Mould said.
The listing could be delayed to the second half of this year, which would require Shein to refile paperwork with UK regulators.
Shein also faces potential cost increases after US president Donald Trump moved to end a tariff exemption that allowed it to ship low value deliveries to American customers, without duties.
The company has increased spending on marketing and logistics as it competes with Temu for market share.