Shares of fast-fashion's Shein plunge 14% to record low after profit slides

Business Recorder reported that Shein's shares fell as much as 14% in Hong Kong on Tuesday, touching a record low, after the company posted a 67% drop in quarterly profit in its first results since listing. By midday the company's market value was about $17 billion, compared with roughly $26 billion when it debuted in Hong Kong on September 1. The stock was 10.9% lower at HK$31.44 at that point.

Adjusted net profit for the second quarter came to $228 million, and the margin shrank to 2.1% from 6.2% a year earlier. Higher jet fuel and freight costs, linked to the Middle East conflict, squeezed the low-cost air shipping model. Sales in Europe fell sharply after Shein raised prices and cut online advertising ahead of €3 fees that the EU applies to low-value e-commerce parcels from July 1.

Jefferies analysts estimated that quarterly earnings landed more than 10% under the bottom of the range set out in the prospectus. Chief executive and chair Yangtian Xu said on Monday that boosting European inventory was a key priority, and that the company intends to move into pricier clothing to lift profitability. Shein has also argued that the European fees could have a bigger effect than the US removal of duty-free access for low-value parcels.