Reports: Fast-fashion retailer Shein has filed for IPO in U.S.

2023-11-29 Editor : Li Yan ECNS App Download

Shein, the trendy, fast-fashion online retailer, has confidentially filed for an initial public offering in the United States, according to news reports.

Founded in Nanjing, China, as ZZKKO by entrepreneur Chris Xu, who is also known as Yu Yangtian or Sky Xu, Shein grew to become the world's largest fashion retailer as of 2022. The company is now headquartered in Singapore.

Shein's apparel is popular with teenagers and young adults, as many of its offerings are priced under $10. Online influencers post videos to TikTok and Instagram featuring their "Shein hauls", reported.

Shein's IPO filing was first reported by the Shanghai Securities Journal last week. The Wall Street Journal confirmed the report on Monday, citing people familiar with the matter.

Goldman Sachs, JPMorgan Chase and Morgan Stanley have been hired as lead underwriters on the IPO, and Shein could launch its new-share sale some time in 2024.

Shein has not determined the size of the deal or the IPO valuation, the sources said. Bloomberg reported earlier this month that Shein had targeted up to $90 billion in the float. The company was most recently valued at $66 billion. Shein and the banks declined to comment.

CB Insights ranked Shein as the third-most valued venture-backed "unicorn" company, behind only TikTok parent ByteDance and Elon Musk's SpaceX, Barron's reported.

A U.S. stock listing could make Shein the largest stock offering for a company that originated in China since ride-hailing giant Didi Global's 2021 IPO, the Journal reported.

The most valuable China-founded enterprise to go public in the United States so far is e-commerce giant Alibaba Group, which debuted in 2014 at a valuation of $231 billion.

"It doesn't strike me as the most opportune time for Shein to come public, but if they need capital, the markets are open ... and investor sentiment has been more positive than it was a few weeks ago," said Jason Benowitz, senior portfolio manager at CI Roosevelt.

Sumeet Singh, an analyst at Aequitas Research who publishes on SmartKarma, said big companies like Shein were tapping capital markets due to peaking interest rates and ahead of possible changes in U.S. regulations for small retailers.

"It's probably as good as it gets for them right now," he said.

Shein's planned IPO also could face some TikTok-level scrutiny by U.S. regulators and legislators, largely due to the current chilly relations between the U.S. and China.

Shein had started low-profile roadshows for the IPO in the U.S., said a Reuters source.

"As it is a significant and highly disruptive player in the retail space, Shein will attract a lot of investor interest," said GlobalData Managing Director Neil Saunders.

Shein hauled in $23 billion in revenue and $800 million in net profit in 2022 and told investors that it delivered record revenue and income for the first three quarters of 2023, The Wall Street Journal has reported.

Known for its $10 tops and $5 shorts, Shein ships the majority of its products directly from China to shoppers by air, in individually addressed packages.

The direct shipping strategy helped the company avoid inventory accumulating in warehouses and also import taxes in the United States, as it allows the e-tailer to take advantage of the "de minimis" provision that exempts cheap products from tariffs.

Fast fashion retailers have become hugely popular in the United States, with Shein taking away market share from established apparel retailers such as Gap.

The U.S. market is Shein's largest, and the company has 1,400 workers in its warehouse in Indiana, according to the Financial Times.

Shein has faced fierce competition from Boston-based Temu, a similar online marketplace.

Temu, which also offers goods shipped directly from Chinese manufacturers, is owned by Pinduoduo (PDD Holdings), which trades on the Nasdaq Stock Market and was founded in Shanghai. In 2023, PDD changed its legal domicile to Dublin, Ireland.

In August, Shein partnered with New Jersey-based SPARC Group, a joint venture between Forever 21 owner Authentic Brands and mall operator Simon Property Group in an effort to expand market reach.

Agencies contributed to this story.


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