Chinese e-commerce giant Shein has suffered a major financial blow, with its net profit dropping by more than $1 billion in 2024, according to a new report. The decline comes after the Trump Administration shut down a lucrative tax loophole the company had been using to send items to the US, sparking fears of even greater losses ahead.
Despite an increase in sales, Shein’s bottom line has taken a hit. A report by the Financial Times revealed that while the company’s sales grew by 19% to $38 billion, its profit figures fell significantly short of initial expectations. Internal projections had suggested a net profit of $4.8 billion and sales of $45 billion for 2024, but the actual numbers have come in far lower, according to sources with knowledge of the matter.
Shein, which is currently preparing for a highly anticipated listing on the London Stock Exchange, has yet to publicly comment on the figures. However, the company’s financial struggles come at a critical moment, with reports suggesting that its valuation could be slashed significantly ahead of its initial public offering (IPO).
Earlier this month, Reuters reported that Shein was set to cut its valuation by nearly a quarter to around $50 billion for its London IPO. However, some analysts believe the situation could be even worse, with recent reports suggesting that Shein may be forced to drop its valuation as low as $30 billion due to increasing financial pressure.
The tax loophole closure has been a significant blow to the company, which had previously benefited from exemptions when shipping products to the United States. The Financial Times reported that this change, implemented by the Trump Administration, could directly impact Shein’s profitability and potentially force the company to raise prices in one of its biggest markets.
As a result of these financial and regulatory hurdles, Shein’s London IPO could now be postponed until the second half of the year. The move would allow the company time to assess its financial outlook and adjust its strategy to account for the loss of its tax advantage in the US.
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