Shein reported $228 million in adjusted net profit for the second quarter of 2026, down 67% year-over-year, as higher freight costs and weaker sales in Europe and the U.S. pressured profitability, according to Reuters. The results were Shein’s first as a publicly traded company following its September 1 Hong Kong listing.
The fast-fashion retailer generated $11.08 billion in second-quarter revenue, up just 0.9% from a year earlier. Growth in Latin America helped offset declines across Shein’s two largest markets.
Revenue in Europe fell 13.9% to $3.77 billion, while U.S. revenue declined 6% to $2.5 billion. Shein raised European prices and cut online advertising ahead of new EU fees on low-value e-commerce parcels.
Shein’s adjusted net profit margin fell to 2.1% from 6.2% a year earlier, with Middle East conflict contributing to higher jet-fuel and freight expenses. Fulfillment costs rose 18.1%, a rise Jefferies analysts said exceeded expectations.
The company is responding by expanding inventory held closer to European customers. Shein has been increasing warehouse capacity in Poland, including a large logistics hub in Wroclaw and additional leased warehouse space.
CEO and Chairman Yangtian Xu also outlined plans to expand Shein’s assortment into higher-priced brands, a strategy aimed at raising average selling prices and improving profitability. The company is considering a broader portfolio of brands across different price points, including potential acquisitions.
Regulatory changes remain another challenge. The European Union introduced a €3 fee on low-value e-commerce parcels starting July 1, with another €2 handling fee planned for November 1. Shein had previously raised U.S. prices after changes to the de minimis exemption increased costs on low-value imports.
Since its Hong Kong market debut, Shein shares have fallen 27.3% from their HK$48.56 IPO price, reflecting investor concerns about slowing growth and margin pressure.
