By Rajwa Quasim
Fast fashion retailer Shein reported a $99 million loss in the first quarter due to weaker sales after U.S. removed duty-free exemptions for small imports along with larger one-time accounting charge, as per its pre-IPO filing released on Sunday. It moves ahead with plans for an initial public offering (IPO) in Hong Kong.
Pre-IPO showed that Shein had a loss in Q1 when compared with a net income of $395 million a year earlier. The loss reported are due to slowing sales after the U.S. removed a tax exemption that had low-value packages enter the country duty-free, and a one-time accounting charge of $328 million tied to how the company values certain investor shares ahead of its listing.
The tax break, known as the “de minimis,” set a threshold of $800, which made it easier for e-commerce and global retailers to ship small packages to the U.S. without paying duties. It was announced in May 2025 and came into effect in August 2025. As per the White House, this exemption was being used to “evade tariffs and funnel deadly synthetic opioids.”
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Now, Chinese-origin products sold by the company and shipped to the U.S. subjected to tax rate from 10% to 87.5%. “In response to the increased duties and taxes, we are pursuing a wide range of options, including increasing our prices in the U.S. market to offset a portion of the increased costs,” Shein said.
Making things worse, another major market of Shein — the European union recently added a €3 fee on low value packages shipped from outside the EU. The move is meant to limit competition from Chinese e-commerce platforms.
Despite the rough quarter, its annual revenue rose from $32.1 billion in 2023 to $41.9 billion in 2025 and reportedly growing roughly 14% per year. But its net income fell 38.7% to $2.06 billion from the preceding year. Clothing makes up most of Shein’s sales, but other product categories are growing faster including, newer service business.
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Previously, Shein tried to get listed in New York and London, but failed to do so. Since then, it shifted to Hong Kong. The China Securities Regulatory Commission (CSRC) approved it on July 10. The company had faced allegations over forced labor, though Shein said it has a zero-tolerance policy on labor abuses, and has invested in risk assessments and mitigation frameworks to safeguard users.
Shein founder Sky Yangtian Xu, who started the company in 2012, remains the company’s chairman and CEO, as per the fillings. Its pre-IPO investors include IDG, Sequoia Capital, HongShan, Tiger Global, Boyu, Brookfield and General Atlantic. The filings also revealed joint sponsors including Goldman Sachs, JPMorgan Chase and Morgan Stanley.