Shein shares fall as quarterly profit drops 67%
Shares in fast-fashion retailer Shein fell more than 6% on Tuesday after the company reported a sharp decline in quarterly profit.
Shein’s adjusted net profit fell 67% to $228 million in the second quarter, as higher freight and fuel costs put pressure on the online retailer’s margins.
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Its profit margin dropped to 2.1%, compared with 6.2% a year earlier, as conflict in the Middle East pushed up jet fuel and freight costs.
Shein relies heavily on air freight to deliver its clothing to customers around the world.
Jefferies analysts estimated that the company’s earnings were more than 10% below the lower end of the range indicated in its prospectus.
The latest results add to a difficult start for Shein on the Hong Kong stock market.
Since its listing on 1 September, its shares had fallen 27.3% from their offer price of HK$48.56 by Monday’s close.
The stock was trading at around HK$33.40 on Tuesday.
Shein CEO and Chair Yangtian Xu said increasing the amount of inventory held in Europe was now a priority.
The company also plans to expand its range of higher-priced clothing in an effort to improve profitability.