Online fast-fashion retailer Shein is poised to reduce its potential valuation in a planned London listing to about $50 billion, as reported by three sources familiar with the matter. This new valuation is nearly a quarter lower than the company's fundraising value in 2023 due to increasing challenges.
Recent developments have cast doubt on the company's business outlook following the announcement by the Trump administration of closing the duty exemption in the United States. This move is expected to impact Shein’s ability to maintain low prices and potentially raise product prices in its primary market, the U.S.
The final IPO valuation will be influenced by the implications of ending the de minimis provision on the company's operations, one of the sources stated. Given the recent implementation of this change, time will be needed to evaluate its effects.
Shein and competitor Temu were major players in the U.S. market, accounting for over 30% of daily packages shipped under the de minimis provision. This provision waived import duties on shipments valued below $800.
The sources requested anonymity due to confidentiality restrictions. Shein, established by Chinese entrepreneur Sky Xu, did not provide a comment.
The elimination of de minimis is part of President Donald Trump's strategy to impose a 10% tariff on Chinese goods. China is a significant source of packages shipped under the de minimis provision, per a congressional committee report.
Shein had plans to go public in London in the first half of the year pending approvals from UK and Chinese regulators, according to a Reuters report. The company’s 2023 fundraising valued it lower than its previous peak.
This anticipated IPO valuation decline would mark the retailer's second consecutive devaluation in funding rounds, a practice known as a down round.
UK authorities have been making efforts to enhance their regulatory framework to attract more businesses to the London market. A government source expressed interest in Shein's IPO in London.
Shein submitted paperwork with Britain's Financial Conduct Authority (FCA) in early June, but the regulatory approval process has taken longer than expected. The FCA has not yet confirmed its approval for the IPO, according to a separate source.
While no reasons for the valuation adjustments have been disclosed, the IPO remains significant as it involves both British and Chinese regulatory bodies.