Why fast fashion giant Shein faces an uphill battle to regain its mojo

Shein's debut on the Hong Kong Stock Exchange in September 2025 came at a challenging period for the fast-fashion giant. Despite posting a loss of $99 million in the first three months of 2026, it had raised HK$13.6 billion ($1.7 billion) in its initial public offering, valuing the company at $26.3 billion. However, this was considerably lower than its peak valuation reached during the Covid-19 pandemic in 2020, when the company's sales had more than trebled.

The setback faced by Shein can be attributed to several factors, including tighter global regulation, intensifying competition, and the waning of the e-commerce frenzy that started during the pandemic. In January 2026, Shein reported a loss of $99 million for the first quarter, compared to a profit of $395 million in the same period in 2025. The company's profitability has deteriorated, and revenue growth has slowed as it faces increased pressure from competitors and evolving market dynamics.

Shein's roots can be traced back to Nanjing, China, where it was founded in 2012 by entrepreneur Sky Xu. The company initially relied heavily on China's garment manufacturers, but in 2022, it shifted its headquarters to Singapore, distancing its corporate identity from China. Despite being headquartered overseas, Shein's shopping website and app remain inaccessible to users in mainland China.

Shein's success can be attributed to its ability to rapidly identify and replicate emerging fashion trends, offering ultra-cheap clothing primarily through its online platform. The company's young, Gen Z customer base, primarily in the US and Europe, has driven much of its growth. With suppliers able to complete the design and production of a garment within just 10 days, Shein has managed to significantly outpace its competitors in terms of turnaround times.

Its proprietary technology collects app data on customer browsing and buying habits, which helps inform business decisions about which styles and materials are popular and where they can be sourced most efficiently.

In 2022, Shein reached a staggering valuation of $100 billion, making it the world's third-most valuable startup at the time. However, this growth has slowed in recent years, with the company's e-commerce revenue in 2025 falling short of the $41.8 billion target set for the year. The intensifying competition, particularly from Temu, a Chinese e-commerce marketplace owned by PDD, has forced Shein to expand its own marketplace model beyond fashion into home, pet products, and consumer electronics sold by third-party merchants.