- Reports are swirling that fast fashion giant Shein will go for a much lower valuation in a potential London listing.
- It is now thought to be targeting a $50 billion, almost a quarter less than that indicated by fundraising rounds in 2023.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’Shein’s planned London listing was already mired in controversy and now it’s hit by fresh tariff turmoil, becoming ensnared in clampdowns on e-commerce giants. Trump’s tariff order to reverse shipping loopholes has shone the spotlight on other countries exemptions for small, imported packages. It seems it has prompted the European Commision to act as its now urging EU lawmakers to phase out exemption on customs duties for parcels under €150. These exemptions have helped give the fast fashion giant more muscle. It is highly reliant on keeping prices low and this has been helped by the firm not having to pay import duties on millions of low-value packages. Now that the US administration has closed this loophole, known as “de minimis” in the United States, it looks like other countries will follow suit.
This looks set to be a big bump in the road for Shein’s controversial planned listing on the London Stock Exchange. If Shein can’t compete so easily on price in major markets like the US and the EU, it’ll be a much harder sell, particularly given it also faces claims of environmental recklessness and poor working conditions in its supply chains. This is likely knock potential investor sentiment and make it that bit harder to achieve a hoped-for blockbuster valuation. It’s also set to reignite calls for a similar move to be made in the UK to offer protection to hard-hit domestic retailers. Superdry’s co-founder Julian Dunkerton is among those who have has called for action to stop Shein ‘dodging tax’ by using this advantage by importing single parcels.
With the spotlight on Shein’s business model shining more intensely, the company looks set to set its sights on a cheaper listing price, and drum up more appetite among institutional investors. Shein is a laggard among its peers when it comes to environmental social and governance criteria. Improving transparency and reporting on these issues identified in its supply chain will be key to improving investor sentiment around the company.’’
