Shein reported a loss of 99 million dollars in the first quarter of the year. The result comes after a slowdown in sales in the United States, caused by the elimination of the customs duty exemption for low-value packages.
The e-commerce giant now warns that the new tax introduced by the European Union for such packages could heavily impact the business.
The financial results were published ahead of the company's listing on the Hong Kong Stock Exchange and show a significant change compared to the same period last year when Shein recorded a net profit of 395 million dollars, Reuters reports.
This month, the European Union introduced a 3 euro tax for low-value e-commerce imports, a measure aimed at limiting what Brussels considers unfair competition from platforms in China.
US Sales Decline After Customs Duty Exemption Removal
The company says that the elimination, starting in May 2025, of the American "de minimis" facility had a "negative impact" on sales and growth rate.
The rule allowed parcels valued under 800 dollars to enter the US duty-free. After its elimination, Chinese-origin products shipped directly to American customers are subject to duties ranging from 10% to 87.5%.
"In response to the increase in customs duties and taxes, we are exploring a wide range of options, including raising prices in the American market to offset some of the additional costs," the company conveyed.
Shein's revenues from the United States dropped by 14.3% to 2.04 billion dollars in the first quarter, compared to 2.38 billion in the same period last year.
Europe Could Follow the Same Scenario
Europe accounted for about a third of Shein's revenues in 2025, and the company warns that the new tax introduced by the EU could have similar or even more severe effects than those observed in the United States.
"Although it is still too early for a complete assessment, developments in the European Union may generally be similar or even exceed the impact observed in the United States after the elimination of the American 'de minimis' exemption," the listing prospectus states.
Annual Profit Sees Sharp Decline
For the full year 2025, Shein's net profit decreased by 38.7% to 2.06 billion dollars, while revenues only grew by 8% to 41.85 billion dollars, a much slower pace than in previous years.
The first-quarter loss was also amplified by an exceptional accounting adjustment of 328 million dollars, related to the revaluation of some convertible preferred shares before the stock market listing.
The company, founded in China and headquartered in Singapore, received approval from Chinese authorities in July for listing on the Hong Kong Stock Exchange after failed attempts to list in New York and London.
In the documents filed for the offering, Shein estimates that the funds raised will be used for investments in technology, international expansion, brand consolidation, and corporate responsibility program development.