Shein swings to $99M loss ahead of Hong Kong IPO as US duty exemption ends

Shein swung to a $99 million first-quarter loss as the US removed an import duty exemption on small packages, according to its draft prospectus for a Hong Kong listing.

The Singapore-headquartered fast-fashion retailer posted a net loss of $99 million in the three months ended March, compared with a net income of $395 million a year earlier, the filing showed. The loss stemmed from slowing sales after the US eliminated the de minimis rule, which had allowed duty-free entry for small packages, and a one-time accounting charge.

The company did not disclose the size of the Hong Kong share sale, the offer price, the listing timetable or expected proceeds in the draft prospectus. Shein also did not reveal which entities will sell shares in the IPO or possible changes in the shareholding of existing investors.

Shein's four co-founders — Sky Yangtian Xu, Maggie Gu, Molly Miao and Tony Ren — own 65% of the Cayman Islands-registered holding company Shein Global Holdings Ltd through their investment vehicles, the filing showed. Investors including IDG and Sequoia Capital hold the remaining stakes. The co-founders hold Class A and Class B shares, with Class A shareholders carrying 10 times the voting rights of other investors, a structure the company said allows them to exercise voting control as they have "materially contributed to the success of our company."

Xu, 42, serves as chief executive officer and chairman after executive chairman Donald Tang stepped down. He oversaw the adoption of data-driven design using AI and machine learning to analyze fashion trends and predict demand. Miao, 41, is chief operating officer, shaping business strategy and global expansion. Gu, 44, leads product innovation as chief product officer, while Ren, 40, oversees supply chain ties and public affairs as chief supply chain officer.

The board comprises seven members, including the four co-founders and three independent directors: Denny Ting Bun Lee, who sits on the boards of Nio and New Oriental Education and Technology; Hongbin Cai, dean and chair professor of the University of Hong Kong's Faculty of Business and Economics; and Ming Yan Lim, chair of Changi Airport Group.

The loss and regulatory headwind from the de minimis rule change could weigh on investor sentiment for Shein's IPO, potentially lowering its valuation or subscription rate. The outcome will also signal broader risks for Chinese cross-border e-commerce companies that rely on the small-package exemption for US market access. Investors will watch for the pricing range and listing date in the coming weeks.

This article is for informational purposes only and does not constitute investment advice.