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Retailer Shein files to go public, eyes global reach

By HENG WEILI in New York | China Daily Global | Updated: 2023-12-04 10:19

People shop at a Shein pop-up shop inside Times Squares' Forever 21 in New York City, US, Nov 10, 2023. [Photo/Agencies]

The fast-fashion retailer Shein has filed for an initial public offering in the United States, according to news reports.

Shein, founded in Nanjing in China's Jiangsu province as ZZKKO by the entrepreneur Chris Xu, who is also known as Yu Yangtian or Sky Xu, grew to become the world's largest fashion retailer last year. The company's headquarters is now in Singapore.

Shein's apparel is popular with teenagers and young adults, many of its offerings being priced at less than $10. Online influencers post videos on TikTok and Instagram featuring their "Shein hauls", Inc.com reported.

Shein's IPO filing was first reported by the Shanghai Securities Journal last month, and last week The Wall Street Journal said the report was true, citing people familiar with the matter.

Goldman Sachs, JPMorgan Chase and Morgan Stanley have been recruited as lead underwriters on the IPO, and Shein could launch the share sale next year.

Shein has not determined the size of the deal or the IPO valuation, sources said. Bloomberg reported earlier last month that Shein had targeted up to $90 billion in the float. The company was most recently valued at $66 billion. Shein and the banks declined to comment.

CB Insights has ranked Shein as the third-most valued venture-backed unicorn company, behind only ByteDance, owner of TikTok, and Elon Musk's SpaceX, Barron's reported.

A US stock listing could make Shein the largest stock offering for a company that originated in China since the IPO of the ride-hailing company Didi Global in 2021, The Wall Street Journal reported.

The most lucrative IPO of a China-founded company has been that of the e-commerce company Alibaba Group, which debuted at a valuation of $231 billion in 2014.

"It doesn't strike me as the most opportune time for Shein to come public, but if they need capital, the markets are open," said Jason Benowitz, senior portfolio manager at CI Roosevelt. "And investor sentiment has been more positive than it was a few weeks ago."

Sumeet Singh, an analyst at Aequitas Research who publishes on SmartKarma, said big companies such as Shein were tapping capital markets because of peaking interest rates and before possible changes in US regulations for small retailers.

"It's probably as good as it gets for them right now," he said.

Shein's planned IPO could face the kind of scrutiny by US regulators and legislators that TikTok faced, largely because of chilly relations between the US and China.

Shein has started low-profile roadshows for the IPO in the US, a Reuters source said.

"As it is a significant and highly disruptive player in the retail space, Shein will attract a lot of investor interest," said Neil Saunders, managing director of GlobalData.

Last year Shein reported revenues of $23 billion and a net profit of $800 million and told investors that it had record revenue and income for the first three quarters of this year, The Wall Street Journal has reported.

Shein, well known for its $10 tops and $5 shorts, ships the bulk of its products directly from China to shoppers by air, in individually addressed packages.

The direct shipping strategy has helped the company avoid inventory accumulating in warehouses and import duties in the US, because it allows the e-tailer to take advantage of the de minimis provision that exempts cheap products from tariffs.

Fast-fashion retailers have become hugely popular in the US, with Shein taking market share from established apparel retailers such as Gap.

The US market is Shein's largest, and the company has 1,400 workers in its warehouse in Indiana, the Financial Times reported.

Agencies contributed to this story.

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