Dive Brief:

• Fast fashion giant Shein raised $2 billion in a recent funding round, but its total valuation has dropped to about a third of what it was last year, according to the Wall Street Journal. 
• Despite this new funding, the company’s valuation has fallen to $66 billion compared to $100 billion in the year prior, the WSJ reported. Shein’s valuation had been on a strong growth trajectory since 2019, when it was valued at $5 billion, according to data from Business of Apps.
• The news comes after Shein has faced recent scrutiny in the U.S., including a request for the SEC to halt its potential bid to become publicly traded and concern over forced labor practices.

Dive Insight:

While Shein has hit several obstacles in its potential IPO, including the reported value drop, it continues to push forward with new funding.

A spokesperson said in an email that as a private the company, Shein does not discuss financial figures. However per Crunchbase, the new funding round was led by Sequoia Capital China, General Atlantic and the United Arab Emirates’ sovereign-wealth fund Mubadala.

The fast fashion company posted a total revenue last year of $23 billion, and its net profit totaled $800 million, according to the WSJ report, which cites “people close to the company.” Shein has also set a target goal of increasing revenue by 40% this year.

Shein, which was founded in China but is now based in Singapore, is facing pressure in the U.S. to account for its supply chain and manufacturing practices.

Earlier this month, a bipartisan group of lawmakers asked the SEC to halt an IPO until Shien verified it did not use forced labor in the manufacturing of its products.

These labor concerns also led the U.S. House Select Committee on Strategic Competition between the United States and the Chinese Communist Party to request additional information from Shein’s CEO over compliance with the Uyghur Forced Labor Prevention Act, a 2021 law which bans products from the Xinjiang region in China.

A Shein spokesperson said in an email at the time of the report that Shein didn’t have any suppliers in that region and that its suppliers were based in Brazil, Southern China and Turkey.

Shein wasn’t alone in receiving such a letter. Lawmakers also wrote to leaders of Adidas, Nike and Temu for additional information on labor and garment sourcing.

Despite, or perhaps because of this recent turmoil, Shein is attempting to alleviate some criticism. 

Earlier this week, Shein financially boosted one of its programs meant to “empower its ecosystem of third-party manufacturing suppliers, and the workers within.” It will invest a total of $70 million in its Supplier Community Empowerment Program to upgrade its supply chain.

Editor’s note: This story has been updated to include a statement from Shein.