Dive Brief:
- Shein has reportedly confidentially filed an initial public offering to become publicly traded in the U.S., which is expected as early as 2024, according to multiple media outlets. A spokesperson for Shein declined to comment.
- Shein reached a $66 billion valuation earlier this year, after it closed a $2 billion funding round in May. Though the company doesn’t usually disclose financial figures, it generated about $1.38 billion in the U.K. from September 2021 to December 2022, boosting its market share in the region.
- The IPO news comes after months of rumors that the Singapore-based fast fashion giant was eyeing a U.S. stock offering, including a false alarm in June and a congressional call to the Securities and Exchange Commission to halt the bid until Shein confirms it doesn’t use forced labor in its supply chain.
Dive Insight:
It’s been a busy year for Shein.
As reports of an IPO swirled, the company boosted its spending on lobbying in the U.S. In Q2, Shein spent $600,000 on lobbying efforts, up from the previous quarter’s spending of $230,000. The move was seen as an effort to gain the trust of lawmakers before a potential IPO.
Shein struck a deal with U.S.-based company Forever 21 in August, which analysts said could “help to lessen the focus on its manufacturing practices, which have come under scrutiny.” In addition, analysts said the partnership could give it more heft, where Forever 21 is seen as a credible brand. Under Shein’s deal with the Sparc Group, operator of Forever 21, the companies can distribute each other’s products through both their digital and retail channels.
Shein also announced it was acquiring the U.K.-based apparel brand Missguided from the Frasers Group in October, which deepens Shein’s presence in the region. In September, analysts expect Shein could boost its market share further in the region to 2.2% in 2023. The acquisition of Missguided the following month could make it even more dominant in the market.
Despite this deal making, the company has faced scrutiny this year over forced labor and copyright concerns.
In May, a group of lawmakers asked Shein to detail its compliance with the 2021 Uyghur Forced Labor Prevention Act, which bans products from the Xinjiang region in China. Preliminary findings in that investigation found that Shein and its online fast fashion rival Temu avoid certain import tariffs and additional U.S. customs scrutiny on their shipments because of their low-priced products.
While Shein and Temu both filed legal complaints against each other this year, both companies mutually agreed to dismiss each of these cases last month.
Though these cases were dismissed, Shein is facing multiple legal complaints for copyright infringement filed by individuals. It has similarly been charged with a Racketeer Influenced and Corrupt Organization Act, or RICO, complaint by a group of independent designers who said Shein “produced, distributed, and sold exact copies of their creative work.”
Shein has said it takes all claims of infringement seriously and would defend itself in the case.
