Shein profits surge in build-up to IPO, now ‘world’s biggest fashion retailer’

Fast fashion group Shein’s profits will become public knowledge in future, whether it lists in London or New York, but for now, we have to rely on secondhand information.

That info — about its 2023 results — comes from The Financial Times, which cited “a financing document” it had seen and “four people close to the company”. And the headline news? The company more than doubled its profits in 2023.

It made more that $2 billion in profits from around $45 billion in gross merchandise value online last year. The China-founded but now Singapore-based business had recorded net income of $700 million in 2022 and $1.1 billion in 2021.

To compare that to the world’s two biggest fashion retailers, H&M’s profits were $820 million and Inditex’s were $5.8 billion in their latest financial years from their omnichannel operations.

The figures from Shein are pretty stunning and Louise Deglise-Favre, Apparel Analyst at GlobalData, highlighted how it “continues to achieve phenomenal growth as its extensive and affordable product offering maintained high appeal among consumers in last year’s tough economic climate. 

“GlobalData now expects Shein to have… become the world’s largest apparel retailer in 2023. The retailer’s strength partially resides in its ability to release thousands of new items daily, ensuring it responds to trends in record time. It has also successfully leveraged the power of social media, benefitting from both influencer marketing and organic user-generated content, such as ‘hauls’, helping it to be top of mind for Gen Z shoppers. Shein’s growth will  also have been driven by the expansion of its marketplace, which stocks third-party brands such as Romwe and Emery Rose, as well as Forever 21, which Shein partially acquired in August 2023. Shein has also been expanding categories such as homewares and beauty, increasing its destination appeal.”

The news comes as Shein awaits regulatory approval on its share listing, with the FT again citing people familiar with the situation to say that the China Securities Regulatory Commission and the Cyberspace Administration of China could approve the share sale “in the coming weeks”. 

China’s view is key to the business. Despite being headquartered in Singapore, China remains the base for much of its business and it had more than 10,000 employees there just over a year ago, with only 200 in Singapore.

There’s still no news on where the initial public offering (IPO) will happen with New York being Shein’s first choice but London seen as a back-up option given the unfavourable atmosphere for Chinese firms listing in the US.

But GlobalData’s analyst  sees challenges ahead when the IPO happens, saying: “Whilst Shein’s IPO location has yet to be determined, it will likely be the largest IPO of 2024. Becoming a public 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 following the many criticisms against its ethical standards. Shein’s growth is also bound to slow down in the coming years as it becomes even more established, and faces rising competition from other ultra-fast Chinese rivals such as Temu, Cider and Rihoas.”