Shein Plans IPO Amid Multi-Sided Fast Fashion Fight
Fast fashion giant Shein is reportedly raising $2 billion as it prepares to go public.
The Chinese online retailer has drawn investments from the United Arab Emirates’ sovereign wealth fund Mubadala, private equity company General Atlantic and venture capital outfit Sequoia Capital China, Reuters reported Thursday (March 9), citing unnamed sources.
The sources tell Reuters Shein has slashed its valuation to $64 billion in this round, dropping by a third since its last fundraising effort in 2022. The company has also held talks with investment banks to find someone to lead its initial public offering (IPO) on the U.S. markets, which could come in the latter half of the year.
The planned listing comes in the middle of a multi-sided battle in the fast fashion world that has seen Shein emerge as a powerful force.
As noted here last month, the company has reportedly told its investors it plans to double its revenues by 2025, and projects its gross merchandise value (GMV) will rise 174% during that same time frame.
The projected annual revenue of $58.5 billion would be more than double last year’s total of $22.7 billion and would exceed combined sales of Shein’s rivals, H&M and Zara.
H&M earlier this year reported quarterly profits had fallen 68% to $84 million, something the company attributed to its winding down of business in Russia and increases in raw materials and freight costs.
“Not mentioned in those results was the meteoric advance of Shein,” PYMNTS wrote at the time, noting the company had topped fast fashion-related searches in 2022.
This year has seen another new player emerge in the form of Temu, an eCommerce firm that has been doing business in the U.S. since 2022, but gained more prominence in February thanks to a pair of Super Bowl ads touting its increasingly popular online shopping app.
A Boston-based subsidiary of China’s PDD Holdings (formerly known as Pinduoduo), Temu debuted in September 2022 as part of PDD’s first major overseas exploration. The company is now considered a Shein rival, though its offerings go beyond clothing and include household products and groceries.
Meanwhile, another fast fashion brand, Wish.com, said last month it had developed new initiatives and partnerships after its revenues for the fourth quarter of 2022 fell 57%.
“Our value-oriented consumers were impacted by the steep increase in energy and food prices, which translated to a slowing of discretionary spending across the regions,” said CEO Joe Yan, adding that “we are not immune to the changes in consumer spending habits, particularly among the lower income households that shop on our marketplace.”
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