Global fast-fashion giant Shein, which maintains its headquarters in Singapore after its founding in China, has reported an unexpected first-quarter net loss, citing new US trade policies, ongoing geopolitical uncertainty, and accounting adjustments as the primary headwinds dragging down its performance ahead of a planned Hong Kong stock market listing.
In its regulatory filing ahead of the initial public offering (IPO), Shein confirmed it posted a net loss of $99 million in the first three months of 2026. This marks a sharp reversal from the $395 million net profit the company recorded in the same period one year earlier, as growth in global sales slowed significantly following a key change to US trade policy.
The downturn traces directly to an executive order signed by former US President Donald Trump that took effect on August 29, 2025, eliminating the longstanding de minimis import exemption. For decades, this rule had allowed packages valued at $800 or less to enter the United States duty-free, a benefit that heavily benefited low-cost online retailers like Shein and rival platform Temu that cater to price-sensitive American consumers. The updated order expanded a prior restriction that only applied to low-cost goods from China and Hong Kong, eliminating the exemption for all countries globally. The Trump administration justified the move by claiming the exemption was being exploited to evade existing tariffs and smuggle deadly synthetic opioids into the country.
“The removal of the US de minimis exemption has had an adverse impact on our sales in the US and the overall growth of our net revenues,” Shein stated in the filing. In response to rising import costs driven by the policy change, the company confirmed it is evaluating multiple mitigation strategies, including rolling out moderate price increases for its US market offerings to offset a portion of the additional expenses.
Shein added that broader geopolitical uncertainty has also weighed on performance, noting that the ongoing Iran conflict has disrupted global supply chains, pushed up operational costs, dampened consumer demand, and caused delivery delays across several key regional markets. Uncertainty around the paused but unresolved tit-for-tat US-China trade war has also created additional planning challenges for the cross-border retailer, the company added.
Roughly one-third of the reported quarterly loss stems from a non-cash paper adjustment tied to an accounting change for special investor shares, which can be converted into ordinary common stock ahead of or following the IPO. The $328 million accounting charge reflects a revaluation of these shares, whose value will remain flexible until the listing is completed.
Despite the quarterly setback, the filing revealed bright spots in Shein’s long-term growth trajectory. In the 12-month period ending March 2026, the company counted 281 million active customers globally, representing a 16% year-over-year increase. These customers placed more than 1 billion orders over the period, underscoring sustained mass consumer demand for the brand’s affordable fast-fashion offerings.
The earnings announcement comes as Shein finalizes preparations for its Hong Kong IPO, a path the company pursued after earlier attempts to launch public listings in New York and London fell through. On July 10, the China Securities Regulatory Commission (CSRC) granted formal approval for the Hong Kong share sale, with the listing expected to launch sometime in the coming months. The latest filing did not disclose key details including the expected IPO size, pricing range, or exact launch timetable.
The policy pressure on Shein is not limited to the United States. Earlier in July, the European Union introduced a €3 levy on all low-value e-commerce imports entering the bloc, a measure explicitly designed to counter what EU regulators call unfair competition from Chinese low-cost online retailers. The new rule mirrors the US shift toward ending duty exemptions for small, low-value packages, creating a dual headwind for Shein in two of its largest developed markets.