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Business News/ Companies / Shein Still Needs to Prove It’s a Bargain

Shein Still Needs to Prove It’s a Bargain


The fast-fashion firm has filed to go public, in what could be one of the largest U.S. market debuts in years.

A wide range of apparel at affordable prices has made Shein a sensation. Premium
A wide range of apparel at affordable prices has made Shein a sensation.

Built-in-China online fashion company Shein has swept the world with its fast-to-market, hip designs. It now needs to show investors that its breakneck growth can convert into bigger profit, too.

Shein, now based in Singapore after moving its headquarters from China in 2021, has filed for an initial public offering in the U.S. that could take place next year. The company is probably looking for a valuation higher than the $66 billion implied by a fundraising round in May. That would put Shein’s market value comfortably above H&M’s $27 billion but below Zara’s parent Inditex’s $127 billion.

A wide range of apparel at affordable prices has made Shein a sensation—especially among younger generations. Shein’s revenue last year was $23 billion, overtaking its Swedish rival H&M, and closing in on fast-fashion leader Zara.

The company continues to grow rapidly: its global monthly active app users in the third quarter of 2023 grew 31% from the year before, according to Sensor Tower. Shein has told investors it had record revenue and income for the first three quarters of this year.

One ingredient in Shein’s secret sauce is its network of suppliers in China. That has allowed the company to quickly iterate designs depending on market demand, and keeps prices and inventory low.

And Shein has probably chosen a good time to go public: Fast-fashion stocks are in vogue. Shares of Inditex hit a high last week after rising 49% this year. H&M shares have gained 55%.

At $66 billion, Shein would be valued at 2.9 times last year’s revenue, similar to Inditex’s 3.5 times. But it would be much more expensive in price-to-earnings terms: 83 times versus Inditex’s 28 times. Margins have been much lower too: The firm’s net margin was only 3.5% last year compared with Inditex’s 13%.

The company is also moving beyond clothing, opening its platform to third-party sellers for all sorts of goods from kitchenware to gadgets. Acting as a marketplace is likely a higher margin business: but one that will put it up against a new set of competitors, including Amazon.

Temu, the global platform of Chinese e-commerce company PDD, is a particularly strong rival—and one that Shein is already fighting with for the wallets of American shoppers. The two companies have been filing lawsuits against each other in U.S. courts: Allegations include antitrust violations and trademark infringement. Both companies have denied the other’s accusations.

Geopolitics is another risk for Shein, although the company has distanced itself from its Chinese roots—most obviously by moving its headquarters to Singapore. Shein has also struck a partnership with Forever 21, including by buying a stake in the operator of the brand. That gives Shein access to revenues from the American brand itself, as well as to its bricks-and-mortar stores in the U.S.

Shein is making a lot of big bets—some of which, like its online marketplace, may be poised to bring margins more in line with its competition. If higher margins do materialize, and the firm maintains anything like its current pace of breakneck growth, it could grow into its premium valuation.

But savvy and deep-pocketed competitors such as PDD and Amazon, to say nothing of fashion stalwarts such as Inditex itself, won’t stand still either. Shein has already bedazzled the fashion world, but it still has a lot to prove to investors.

Write to Jacky Wong at

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