Shares of fast-fashion platform Shein fall 6% after quarterly profit slides 67%

Shares of Shein, the fast-fashion retailer, experienced a significant decline of over 6 percent on Tuesday following the release of its quarterly profit report. The company reported a 67 percent drop in earnings for the second quarter, resulting in adjusted net profit of $228 million, which was more than 10 percent below the low end of the range estimated by Shein’s prospectus. This decline in earnings led to investor concerns over margin pressure and slower growth.

The company's adjusted net profit for the quarter was $228 million, resulting in a margin of just 2.1 percent, compared to 6.2 percent in the previous year. This sharp decrease in profitability can be attributed to rising costs associated with transporting goods, as the conflict in the Middle East increased the price of jet fuel and freight for Shein, which supplies cheap clothes quickly to customers worldwide.

Since Shein made its debut on the Hong Kong stock market on September 1, its shares have dropped by 27.3 percent from the offer price of HK$48.56 ($6.19). As of Tuesday's market close, the stock was trading at approximately HK$33.40. During the same period, Shein's CEO and Chair, Yangtian Xu, emphasized the importance of increasing inventory in Europe and entering the higher-priced clothing market to improve profitability.