Shares of the Chinese fast fashion giant Shein sharply declined by more than 11% on the Hong Kong Stock Exchange on Tuesday after the company disclosed unsatisfactory financial performance.
The company has already faced criticism for its environmental impact and allegations of human rights violations, in addition to facing increasing competition from low-cost e-commerce platforms such as Temu and AliExpress.
On Monday, the firm reported that revenue for the first six months of the year increased by only one percent year-on-year, while operating profit was halved.
By midday on Tuesday, Shein's share price slightly recovered but remained at a 10.9 percent decrease, trading at HK$31.44.
The Monday results were the first since the high-profile initial public offering this month, which valued the company at approximately $26.3 billion—significantly less than the nearly $100 billion achieved during private funding rounds in 2022.
Shein reported that net revenue in Europe fell by 13.9 percent to nearly $3.8 billion in the second quarter. The company attributed this decline to 'a drop in sales volume as we raised prices and cut online advertising spending' in anticipation of the cancellation of customs duty exemptions.
In another key market, the United States, revenue for the April-June period decreased by six percent, linked to the impact of tariffs.
Since its first day of trading on the Hong Kong Stock Exchange in September, Shein's stock price has fallen by more than 35 percent.
Catherin Lim, an analyst at Business Intelligence, noted that the accelerating decline in operating profit 'obscures the degree of recovery in 2027 due to freight relief and unproven advancement into higher-priced brands.' She added that management plans to cover freight and tariff costs independently instead of raising prices to maintain the company's competitive position, although localizing inventory in Europe will lead to increased logistics costs in the short term.