Haute couture and fast fashion are worlds apart. One showcases garments hand-stitched by the industry’s most skilled artisans at esteemed fashion houses. The other churns out low-cost but trendy styles at a frenetic pace. Occasionally, though, these worlds compete for attention. As designers gather for London Fashion Week, a four-day spectacle of runway shows and celebrity parties starting on February 20th, some of the industry gossip will be about Shein, a fast-fashion giant. Specifically, when might it launch its long-awaited initial public offering (IPO)?
A listing should be a boon for investors. A valuation of £51bn ($66bn) would make Shein, which was founded in China but is now headquartered in Singapore, one of the largest companies to list in London in years. Profits in Britain, the retailer’s third-largest market after America and Germany with 6% of all sales, doubled to more than £24m in 2023.
But in America the firm now faces tighter import rules. On February 1st Donald Trump scrapped the de minimis exemption, which allowed Shein and other e-commerce companies to keep prices low by avoiding customs taxes on imported goods below a certain value (lately $800). Donald Tang, Shein’s chairman, is seeking to reassure the firm’s venture-capital and private-equity backers, which include Sequoia Capital and General Atlantic. In a letter to shareholders on February 17th he insisted that growth remains strong. But the hit to its profits from higher taxes means Shein is under pressure to slash its valuation and to delay its IPO to the second half of 2025.
This is just the latest setback. In 2023 lawmakers in America derailed attempts to list its shares in New York. Citing concerns about the alleged use of forced labour, members of Congress called on American’s Securities and Exchange Commission to block the ipo, forcing Shein to pursue a listing in London. Yet its poor environmental record and scrutiny of its Chinese roots have also cast a shadow there. A lack of transparency hasn’t helped. Half of Shein’s peers disclose the names and addresses of direct suppliers; Shein does not.
The Financial Conduct Authority is facing calls to block a potential listing as a result. Yet turning Shein away risks deterring fast-growing businesses that operate in politically sensitive regions from listing in London, according to Karim Al-Mansour, founder of Amanah Capital, a family office based in Britain. Shein, the bulk of whose suppliers and manufacturers are in China, will also require approval from the China Securities Regulatory Commission.
For now, Shein is working hard to mend public perceptions. It has hired a global head of sustainability and committed itself to green pledges such as reducing greenhouse-gas emissions by a quarter by 2030 and reaching net-zero emissions no later than 2050. Shein says that in 2023 “nearshoring”—moving production and distribution hubs closer to customers in America, Brazil and elsewhere—saved carbon emissions equivalent to one year’s worth of energy use for more than 24,000 homes.
Shein is also trying to tackle fashion’s throwaway culture. True, it is part of the phenomenon: each year it introduces 1.3m products; H&M, a rival brand, launches 25,000. To cut waste, Shein operates a second-hand-sales platform, with 4.2m users in America in 2023. It has committed €200m ($207m) to help textile-recycling startups in Europe. Using clever algorithms it achieves an unsold-inventory rate of less than 2%, according to Boston Consulting Group. Estimates of rates across the industry vary from 12% right up to 40%.
People in fashion circles are sceptical. Caroline Rush, CEO of the British Fashion Council, the trade body behind London Fashion Week, has raised concerns about Shein’s business model and its “poor quality” garments. Shein is eager to shift the narrative. Mr Tang, who had $20 in his pocket and spoke little English when he emigrated to America more than four decades ago, wants the company to be seen as a success story, making stylish clothes more widely accessible. Shein has charmed shoppers. Earning the trust of investors will be harder. ■
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