Shares of fast-fashion’s Shein plunge 14% to record low after profit slides

On September 29, shares of fast-fashion retailer Shein plummeted as much as 14% to a record low following its report of a 67% decline in quarterly profit. The earnings slide came in its first post-IPO results, raising concerns about margin pressure and slowing growth. The company's rapid ascent, fueled by breakneck growth, now faces questions about its ability to return to a combination of strong growth and improved margins.

Jianggan Li, CEO of Singapore-based consultancy Momentum Works, expressed concern over the margin compression and the weakness in Europe. Jefferies analysts estimated earnings for the quarter ending June 30 to be more than 10% below the low end of the range projected in Shein's prospectus. As a result, Shein's market value fell to approximately US$17 billion (S$21 billion) by the midday break on September 29, down from about US$26 billion when it went public on September 1.

Shein's stock was down 10.9% at HK$31.44 (S$5.12) at the same time. The company's adjusted net profit for the second quarter was US$228 million, with its profit margin squeezed to just 2.1% from 6.2% in 2025. The decline was primarily due to the conflict in the Middle East, which pushed up jet fuel and freight costs.

Shein's sales in Europe dropped sharply after the company raised prices and cut online advertising to prepare for a new EU fee of €3 (S$4.36) on low-value e-commerce parcels starting July 1. Shein's CEO and chairman, Yangtian Xu, stated that increasing inventory in Europe and introducing higher-priced clothes would be key priorities to boost profitability.

The retailer, famous for selling inexpensive clothing like $5 dresses and $10 jeans, had already had to raise prices in the US in 2025 after the Trump administration ended duty-free access for low-value e-commerce parcels. Shein believes the impact of the new EU fees could be greater than the loss of duty-free access in the US.