The fast-fashion retailer is more likely to succeed with its IPO in London rather than New York.
Chinese online fashion retailer Shein is experiencing explosive growth, doubling its profits to more than $2bn in 2023.
This surge comes as the company prepares for a blockbuster initial public offering (IPO) in either New York, US, or London, UK, with a potential valuation of $90bn.
Shein’s success is fuelled by its focus on trendy, low-cost clothing targeted at Gen Z shoppers.
It leverages social media marketing and a rapid-fire release of new styles (reportedly exceeding 2,000 daily) to capture consumer attention. This strategy has propelled Shein past established players such as H&M and Primark in terms of profitability.
However, Shein’s path to an IPO is not without hurdles. Regulatory approval remains a key obstacle, with the company seeking a green light from both Beijing and the relevant authorities in its chosen listing venue.
Shein’s substantial China operations raise concerns, particularly in the US, where lawmakers have scrutinised the company’s business model and potential ties to the Chinese government.
Despite these challenges, Shein’s financial performance paints a compelling picture for investors.
The company’s gross merchandise value, a metric reflecting total sales on its platform, reached an estimated $45bn in 2023.
This rapid growth puts pressure on traditional UK online retailers such as ASOS and boohoo, who are already grappling with a post-pandemic market squeeze.
The London Stock Exchange is emerging as a frontrunner for the IPO, given perceived difficulties in securing US approval.
A successful listing in London would be a landmark event, potentially becoming the city’s largest-ever listing.
On 15 February 2024, Republican senator Marco Rubio sent a letter to the US Securities and Exchange Commission, asking it to block Shein’s IPO listing.
Concerns about Shein’s ethics further proliferated US worries around its IPO listing.
Regardless of the chosen location, Shein’s IPO is poised to be a major event in the fashion industry, signalling the growing influence of online fast fashion and the spending power of Gen Z consumers.
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