Shein dives over 11pc after earnings disappoint

Shares in fast-fashion giant Shein fell more than 11 percent in Hong Kong on Tuesday following the release of disappointing financial results. The company, which is facing increasing competition from low-cost e-commerce platforms like Temu and AliExpress, reported that revenue only increased by one percent year-on-year in the first half of the year.

Operating profit also fell by half during the same period. By midday on Tuesday, Shein's share price had recovered slightly from the initial drop, but was still down 10.9 percent at HK$31.44. This was Shein's first earnings report since its highly publicized initial public offering (IPO) in September, which valued the company at approximately US$26.3 billion, a fraction of the nearly US$100 billion it was worth during private fundraising rounds in 2022.

European revenue for the quarter dropped by 13.9 percent to nearly US$3.8 billion, according to Shein's report. The decline was attributed to a combination of reduced sales volume and higher prices, as well as decreased online advertising spending due to the anticipated removal of customs duty exemptions. The United States also saw a decline in revenue for the April-June quarter, with a six percent drop, likely due to the impact of tariffs.

Since its debut on the Hong Kong Stock Exchange in September, Shein's share price has dropped by over 35 percent.