Fast fashion giant Shein is poised to slash the target valuation for its planned float in London as it grapples with new trade barriers in the US and growing political concerns in the UK, according to reports.
The Chinese founded retailer, which is expected to list in London later this year, is set to be hit by punitive new trade policies from the White House which will scrap a “de minimis” exemption on small packages flowing into the US, one of Shein’s biggest markets.
The change is set to ramp up costs and eat into the company’s profitability.
Bosses are likely to now cut the company’s target valuation to about $50bn for the IPO, around $16bn below its last valuation in a 2023 private funding round, Reuters reported, citing people familiar with the plans.
Donald Trump’s removal of the de minimis tax break has piled further pressure on the company after months of fury from campaign groups over its plans to float on the London Stock Exchange.
Shein has been dogged by allegations it uses forced labour in its supply chain and sources cotton for its products from the Xinjiang region, where the Chinese government is accused of persecuting the Uyghur minority.
Lawmakers in Westminster have questioned whether the City of London should host the company given its human rights record.
‘’Shein’s planned London listing was already mired in controversy and now it’s hit by fresh tariff turmoil, becoming ensnared in clampdowns on e-commerce giants,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“This looks set to be a big bump in the road for Shein’s controversial planned listing on the London Stock Exchange. If Shein can’t compete so easily on price in major markets like the US and the EU, it’ll be a much harder sell, particularly given it also faces claims of environmental recklessness and poor working conditions in its supply chains,” she added.
Shein confidentially filed papers with Britain’s Financial Conduct Authority (FCA) in early June, Reuters reported last year. However, the regulator is yet to sign off on the plans and has taken longer than typically expected deliberating.
The FCA has not made any decision to approve the IPO yet, a separate person told Reuters.
Shein has been contacted for comment.