Shein has crashed to a £74m quarterly loss after changes to US import rules drove up operating costs and hit sales in its biggest market.
The fast-fashion giant fell into the red during the first quarter of 2026, dropping from a £295m profit during the same period last year, according to filings published ahead of its planned Hong Kong stock-market listing.
The loss was partly caused 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 has hampered growth and raised expenses.
The exemption previously allowed packages valued under roughly £600 to enter the US tariff-free.
The Trump administration scrapped the exemption for imports from China and Hong Kong in May 2025, hitting millions of low-value parcels with extra taxes and customs checks. Consequently, Shein’s US revenue fell 14.3% to £1.53bn during the quarter, down from £1.78bn a year earlier.
Items originating in China and shipped to American shoppers now face duty rates ranging from 10% to 87.5%.
To recoup these expenses, Shein is considering further US price hikes—a move that risks undermining its primary competitive edge over established High Street retailers. The US generated 22.5% of Shein’s quarterly revenue, down from 29.4% in 2023, while its operating margin squeezed to 2.9%.
Similar headwinds loom in Europe, which accounted for roughly a third of Shein’s revenue last year.
This month, the European Union introduced a charge of around £2.60 on low-value e-commerce parcels to curb what it views as unfair competition from overseas online marketplaces. Shein warned the European impact could equal or exceed the disruption experienced in the US.
The group’s net profit for 2025 fell 38.7% to £1.54bn, even as revenue rose 8% to £31.28bn—a sharp slowdown from the 20.7% growth delivered in 2024.
Shein is now edging closer to a long-awaited Hong Kong initial public offering (IPO), having previously shelved plans to list in New York and London.
China’s securities regulator approved the proposed listing on 10 July, though Shein has yet to disclose the size, pricing, or timetable for the share sale.
The retailer is reportedly seeking a valuation of between £30bn and £37bn, well below the £75bn valuation it secured during a 2022 fundraising round.
While proceeds will be channelled into technology, global expansion, brand awareness, and corporate responsibility initiatives, Shein’s shrinking margins, rising import duties, and heightening regulatory pressure will likely give prospective investors pause.
