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LONDON\/HONG KONG: Now that it has clinched a stock market listing after years of false starts, Shein, is working to convince investors that it is more than \u200ba fast fashion fad.<\/strong><\/p>\n Armed with $15 billion in cash, according to its prospectus, plus another $1.74 billion raised in the IPO, it is primed for an acquisition-driven phase \u200cas it seeks to recover from stalled sales growth.<\/p>\n Shein confirmed in its prospectus its plan to buy U.S. brand Everlane for $80 million in a step to becoming a platform, not just for its own brands, but for brands it has acquired and plugged into its high-speed supply chain and wide customer base.<\/p>\n The Everlane deal is just a \u201cdry run\u201d of Shein\u2019s acquisition strategy, which will pursue brands with different price ranges to attract a \u200bbroad customer base, a source familiar with the situation told Reuters.<\/p>\n Shein\u2019s history so far suggests there could be obstacles.<\/p>\n Its Hong Kong IPO this \u200bweek followed years of attempts in New York and London where it was thwarted by regulatory hurdles.<\/p>\n Shein shares closed on Friday at 38.14 \u2060Hong Kong dollars ($4.86), more than 20% lower than its offer price.<\/p>\n Investors have yet to price in a successful transition to a brand and platform business, said Louise Deglise-Favre, lead apparel \u200banalyst at market intelligence firm GlobalData.<\/p>\n She said building \u201ca meaningful brand portfolio\u201d takes years whereas Shein\u2019s revenue is being impacted now by U.S. President Donald Trump\u2019s decision to remove \u201cde minimis\u201d duty-free access for small \u200bparcels. Shein\u2019s sales growth slowed to 1.1% in the first quarter of 2026, from 8% annual sales growth in 2025.<\/p>\n Approached by Reuters, Shein said one of its priorities was to bring more brands onto its \u201cXcelerator\u201d programme through which Shein sells access to its manufacturing network, warehousing and logistics, and its global sales platform.<\/p>\n \u201cWe see significant potential to build on the track record we have established with successful brands such as Missguided,\u201d \u200ba spokesperson for the company said.<\/p>\n Shein acquired British fast-fashion retailer Missguided in 2023.<\/p>\n One hurdle to Shein\u2019s expansion strategy is its reputation. Reports of the Everlane deal \u200bin May triggered an outpouring of hostility on social media from the company\u2019s customers whose loyalty is based on Everlane\u2019s reputation for high-quality, sustainably made basics.<\/p>\n Its slogans include \u201cRadical Transparency\u201d and \u201cClean Luxury\u201d. It uses mainly organic \u200cmaterials, such \u2060as cotton, and shares details of the factory where each item is made.<\/p>\n Shein\u2019s clothes are mostly made of polyester and its website does not specify in which country each garment is made, let alone which factory.<\/p>\n In a letter seen by Reuters, Everlane CEO Alfred Chang told employees Everlane would remain independent and true to its sustainability commitments. He added the acquisition would allow Everlane to boost its competitive advantage and reach more customers globally.<\/p>\n In response to Reuters\u2019 questions, Everlane said its leadership and brand standards remain unchanged.<\/p>\n If successful, the Everlane deal could help Shein \u200breach new shoppers, said Michael Gunther, senior vice \u200bpresident of research and market intelligence at \u2060Consumer Edge. \u201cEverlane\u2019s customer base obviously skews higher income than the Shein brand in the U.S.,\u201d he said.<\/p>\n Shein\u2019s selling point for struggling brands is that its proprietary supply chain software alerts factories when a product is in high demand, prompting them to \u200bincrease production.<\/p>\n It also tells them to discontinue a style if it is not being bought \u2013 a system Shein says helps it to \u200bmaintain very low inventory \u2060levels.<\/p>\n One of the brands in Shein\u2019s \u201cXcelerator\u201d programme increased sales by approximately 15 times in its second year, improved its operating margin by more than 30 percentage points and reduced its inventory turnover days by approximately two-thirds, according to Shein\u2019s prospectus.<\/p>\n \u201cShein at its core is one of the most efficient supply chains ever built,\u201d Missguided founder Nitin Passi said in a LinkedIn post about the Everlane deal.<\/p>\n Although Shein\u2019s \u2060service revenue, or \u200bsales from its marketplace, are growing much faster than sales from its own product lines, they are still \u200bmuch smaller.<\/p>\n \u201cAcquisitions can give Shein another growth engine, but they cannot substitute for improving the economics of the core business,\u201d said Jianggan Li, CEO of consultancy Momentum Works in Singapore. \u201cOne Everlane will not move the needle; what matters \u200bis whether Shein can prove this is a repeatable model.\u201d<\/p>\n<\/div>\nSHARE PRICE HAS FALLEN SINCE LISTING<\/strong><\/h3>\n
EVERLANE DEAL FACES REPUTATIONAL CHALLENGES<\/strong><\/h3>\n
SUPPLY CHAIN EFFICIENCY IS A SELLING POINT<\/strong><\/h3>\n