Shein Doubles Profit to £1.5 Billion in UK Sales, Putting Pressure On Asos and Boohoo

According to reports last week, Shein raised $66 billion last year and is going public in London.

Shein, the Chinese-founded online fast fashion retailer, increased its profit at the UK branch last year and saw a 40% increase in sales to £1.5 billion, making it at par with its competitor Boohoo.

The revenue from the UK, Shein’s third-largest market, generated 38% more revenue annually than disclosed previously for the 16 months leading up to the end of 2022.

According to reports filed at Companies House, the business, which planned on £50 billion float on the London Stock Exchange, reported pre-tax profits at Shein Distribution UK increased to £24.4 million, on which it paid £5.7 million in income tax.

The explosive growth of Shein, which began last year when it purchased the Missguided online brand from Mike Ashley’s Frasers Group, has pressurized UK online fashion retailers like Asos and Boohoo.

According to reports last week, Shein raised $66 billion last year and is going public in London. It has informal investor meetings in the upcoming weeks while it waits for UK regulatory approval.

The new rival is gaining ground as the demand for the British online clothes business decreases after the pandemic.

Online fashion businesses now face increased competition from high-street stores like Primark, Next, Marks & Spencer, and John Lewis, who are expanding their online brands.

Many young people are turning to rapidly expanding sites for second-hand trade, like Vinted and Depop, where they can pick up higher-quality clothing at lower prices.

Depop increased its revenues by 31% to £71.3 million last year, while the registered users increased by 5 million to 35 million. The UK-headquartered company, now headed by US-based marketplace Etsy, cut losses by 28% to £49m. Last year, the platform’s sellers made $600 million in sales worldwide.

Shein, which sells $5 shirts and $10 dresses, does not want to disclose its global sales figures publicly. However, Coresight Research projects that in 2023, Shein’s global sales reached $32.2 billion, and this year, it may surpass $50 billion. In contrast, sales for the 2023 fiscal year totaled 35.9 billion euros ($39.39 billion) for the fast-fashion group Inditex, which owns Zara.

The figures showed that Shein was a powerful competitor to Asos and Boohoo. Sales have decreased for both businesses, and Boohoo recently closed its US warehouse due to cost-cutting measures.

Retailers in the UK have petitioned the government to change the tax laws, as Shein gains from having products shipped from China directly to the consumers, including the US and the UK, to avoid paying taxes.

The EU plans to impose customs duties on cheap items that may negatively impact imports from online shops like Shein and harm its aspirations to list in London.

Workers’ rights campaigners have criticized the proposed flotation as they believe Shein’s supply chain lacks transparency.

UK trading results for Shein are only one aspect of the company’s larger global picture. The listing of the company would also be impacted by issues related to growth, plagiarism, possible supply chain issues, and taxes.

Founded by businessman Chris Xu, the company still manages most of its activities out of China, although all its products are sold outside. The store, which employs 33 people in the UK and has its headquarters in Singapore, is currently the third most valuable startup in the world after reaching a $100 billion valuation in an April 2022 fundraising round.

According to a corporate representative, Shein’s earnings and revenue have increased in the past year, and there has been a considerable need for this due to consumer loyalty in the UK. They keep making investments in on-demand platforms to give clients more options and an improved user experience.