Fast fashion behemoth Shein has reported a substantial quarterly loss, amounting to $99 million (£74.1 million) for the first three months of 2026. This marks a significant reversal from the $395 million net income recorded in the same period last year. The Singapore-headquartered company, founded in China, attributed the downturn primarily to the removal of a key US import duty exemption, which has impacted its sales in the American market.
The move by former US President Donald Trump, which came into effect on 29 August 2025, ended a global ‘de minimis’ exemption that allowed goods valued at $800 or less to enter the US without tariffs. This policy change, initially broadened from an action targeting cheap products from China and Hong Kong, has directly hit online retailers like Shein and Temu, whose business models rely heavily on the affordability of their goods. Shein acknowledged in its filing that the removal of this exemption has had an “adverse impact on our sales in the US and the overall growth of our net revenues.”
In response to the increased duties and taxes, Shein has indicated it is pursuing a range of options, including raising prices for its US customers to mitigate a portion of the heightened costs. This strategic shift could see a change in the competitive landscape for fast fashion, potentially impacting consumer behaviour and the profitability of companies operating within this segment. Furthermore, the company cited the ongoing Iran war as a factor contributing to reduced demand, increased operational costs, and delivery delays in some markets, adding another layer of complexity to its current financial challenges.
The announcement of these figures is part of Shein's ongoing preparations for its highly anticipated stock market debut in Hong Kong. The China Securities Regulatory Commission (CSRC) granted approval for the share sale on 10 July, following previous unsuccessful attempts to list in New York and London. While the filing did not disclose specific details regarding the size, timetable, or pricing of the planned initial public offering (IPO), the listing is expected to proceed in the coming months. The company also noted a paper loss of $328 million in the first quarter due to an accounting change related to special investor shares, which can convert into ordinary stock.
Despite the recent financial setback, Shein continues to demonstrate significant customer growth. In the year leading up to the end of March 2026, the company recorded 281 million active customers, representing an increase of over 16% from the previous year, with these customers placing more than one billion orders. This highlights the enduring appeal of its fast fashion model, even as it navigates complex international trade policies and geopolitical events. The European Union also recently introduced a €3 (£2.56) levy on low-value e-commerce imports, a measure aimed at addressing what the bloc perceives as unfair competition from China, further illustrating a global trend towards scrutinising international online retail.