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By: Serach Nissim
Shein, the China-founded online fashion company, now boasts hundreds of millions of shoppers across the globe, becoming one of the largest fashion brands in the world. Established in 2008, the company gained tremendous growth in the past few years by selling trendy styles at low prices– including $5 skirts and $9 jeans.
As reported by the Wall Street Journal, Shein has confidentially filed to take the company public in the United States, possibly making it one of the biggest IPOs in recent years. The company, now based in Singapore, has tapped Goldman Sachs, JP Morgan Chase and Morgan Stanley to work as lead underwriters on the offering, a source for the WSJ said. Shein was valued at $66 billion earlier this year, in a fundraising round in May where the company raised $2 billion from investors. It will probably aim for an even higher valuation in an initial public offering, which may happen in 2024. In a previous valuation, in April 2022, Shein had been valued at $100 billion, setting its worth to be higher than the combined market cap of Inditex, which owns Zara and H & M.
Shein reported $23 billion in revenue in 2022, and $800 million in net profit that year. The company also told investors that it had record high revenue and income so far in 2023, though those financials are not public yet, as reported by The Wall Street Journal. The retailer sells online in more than 150 countries, with the U.S. being its biggest market. Having already dominated online clothing sales, Shein has taken on other endeavors including becoming a marketplace for third-party sellers. This will pit the company against giants like Amazon, and Temu, which is part of Chinese e-commerce company PDD Holdings. Shein also recently moved to acquire a stake in the operator of retailer Forever 21, which will be the company’s first entry in bricks-and-mortar stores. Shein also recently purchased British women’s fashion brand Missguided.
Though the company seems to have good financials, an IPO is still risky because the U.S. IPO market has been very tough in the past few years. So few companies have even dared to list shares. Most of the companies that did go public, did poorly. The biggest IPO in 2023 so far, was British chip designer Arm Holdings, which had a valuation of about $55 billion when it kicked off in September. That was the biggest IPO deal since 2021, when Rivian Automotive had gone public, with an IPO price which valued the company at about $77 billion. IPO bankers and other experts say they expect more companies to debut in 2024, despite the high interest rates and less-risky alternative investments.
Per the WSJ, as a condition for a U.S. stock listing, local lawmakers and attorneys general have called for an investigation of Shein’s supply chain. The US has long alleged that Shein may source cotton from China’s Xinjiang region, which the US has accused of committing genocide and using forced labor. Shein has said it has a “zero-tolerance policy” for forced labor and that it has installed a “robust system” to comply with U.S. law. The company has asserted that it doesn’t source cotton from China and has no manufacturers in Xinjiang.
