Shares of Shein, the online fast-fashion retailer, plunged by up to 14 percent on the Hong Kong stock exchange today, hitting a new low. This reaction followed reports of a sharp drop in the company’s quarterly profit. The company’s shares only went public earlier this month.
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Shein’s Profit Plunges by 67 Percent in Second Quarter
Shein is a Chinese company with its headquarters in Singapore. The firm has recently been grappling with the negative impacts of customs changes in the United States and Europe. Moreover, the company faces criticism regarding working conditions and the environmental impact of its activities.
On Monday, the company announced that its adjusted net profit for the second quarter decreased by 67 percent year-on-year to 228 million dollars (4.9 billion CZK). The conflict in the Middle East, among other factors, led to an increase in transport costs. Furthermore, revenue in Europe significantly dropped as the company raised prices and curtailed advertising. This was a response to the European Union’s decision to introduce a three-euro customs fee from July on packages from third countries valued up to 150 euros.
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Shares Have Lost Significantly Since Their Stock Market Debut
Shein shares closed today’s trading down nearly 11 percent at 31.50 Hong Kong dollars. During the day, they fell as low as 30.24 Hong Kong dollars. Shares began trading on the Hong Kong stock exchange on September 1, with their offering price at 48.56 Hong Kong dollars.
“Shein continues to report order growth and is expanding its reach in various markets. However, pressure on declining margins and a slowdown in Europe raise questions about how quickly the company can return to a combination of stronger growth and improved margins,” said Singaporean consultancy Momentum Works, according to Reuters.
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Source: CTK
