A Shein reported adjusted net profit of US$ 228 million in the second quarter, a 67% drop from a year earlier, in its first earnings report since its debut on the Hong Kong Stock Exchange. The adjusted profit margin fell from 6.2% to 2.1%, while the shares fell as much as 14% this Tuesday (29).
Quarterly revenue was virtually stable at US$ 11.08 billion, a rise of just 0.9%. The performance exposed a combination of higher logistics costs and weakening in the company's two main markets: sales in Europe fell 13.9%, to US$ 3.77 billion, and in the United States declined 6%, to US$ 2.5 billion. Growth in Latin America offset part of those losses.
Fulfillment costs rose 18.1% in the period. Shein attributed part of the pressure to the rise in aviation fuel and freight prices caused by the conflict in the Middle East, an impact particularly relevant for an operation that depends on air transport to ship a large volume of products directly to consumers.
The market reaction amplified the cumulative decline since the September 1 IPO. Tuesday's decline took the company to about US$ 17 billion in market value, compared with approximately US$ 26 billion at the initial public offering. Hong Kong Exchanges and Clearing published the company's 2026 interim report on Monday (28).
Europe puts pressure on low-cost strategy
In Europe, Shein raised prices and reduced advertising before the entry into force, on July 1, of a charge of €3 per customs code on low-value orders. Because the reported quarter ended in June, the figures do not yet fully incorporate the effect of the new charge.
The company's response involves reducing part of its dependence on direct international shipping. CEO and President Yangtian Xu said one of the priorities is to increase the inventory held in Europe. Shein has also been expanding its logistics infrastructure in Poland.
Another front is raising the average value of products sold. Xu said the company intends to increase the share of brands and higher-priced clothing, a move aimed at improving profitability and diversifying the portfolio beyond the model that made Shein known for low-cost pieces.
