Fast fashion group Shein's profits will be made public in the future whether it lists in London or New York, but for now we'll have to rely on second-hand information.
Shein
This information – about 2023 results – comes from the Financial Times, which cited “a financing document” it had seen and “four people close to the company.” And the headlines? The company more than doubled its profit in 2023.
Last year, the company made more than $2 billion in profits on an online gross merchandise value of around $45 billion. Founded in China but now based in Singapore, the company reported net profits of $700 million in 2022 and $1.1 billion in 2021.
Compared to the world's two largest fashion retailers, H&M's profits in recent financial years were $820 million and Inditex's profits were $5.8 billion from their omnichannel operations.
Shein's numbers are quite impressive and Louise Deglise-Favre, apparel analyst at GlobalData, highlighted that the company “continues to deliver phenomenal growth as its extensive and affordable product offering continues to have strong consumer appeal, even in the difficult economic climate of last year.” “
“GlobalData now projects that Shein will have become the world's largest clothing retailer by 2023. The retailer's strength lies in part in its ability to launch thousands of new items daily, ensuring it responds to trends in record time. Additionally, the company has successfully harnessed the power of social media and benefited from both influencer marketing and organic, user-generated content like “hauls,” which has helped it stay at the top of the list with Gen Z shoppers . Shein's growth is also fueled by the expansion of its marketplace, which carries third-party brands such as Romwe and Emery Rose, as well as Forever 21, which Shein partially acquired in August 2023. Shein has also expanded categories such as homewares and beauty, increasing the destination’s appeal.”
The news comes as Shein awaits regulatory approval for its share listing. The FT again quoted people familiar with the situation as saying that the China Securities Regulatory Commission and the Cyberspace Administration of China could approve the share sale “in the coming weeks.”
China's perspective is key to business. Although its headquarters are in Singapore, China remains the base for much of its business, employing more than 10,000 people there just over a year ago, compared to just 200 in Singapore.
There is still no news about where the initial public offering (IPO) will take place. New York is Shein's first choice, but London is seen as a backup option given the unfavorable atmosphere for listing Chinese companies in the US.
But the GlobalData analyst sees challenges ahead if the IPO goes ahead, saying: “While the location of Shein's IPO has yet to be determined, it will likely be the largest IPO of 2024. Becoming a publicly traded company will force Shein to be more transparent about its finances, operations and supply chain practices, the latter of which will prove challenging for the retailer due to numerous criticisms of its ethical standards. Shein’s growth is also expected to slow in the coming years as it becomes more established and faces increasing competition from other ultra-fast Chinese competitors such as Temu, Cider and Rihoas.”
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