Shein’s 2022 sales grow 4x ahead of IPO to close in on Zara

CHINA-FOUNDED Shein started surging in popularity in 2020 amid the Covid-19 pandemic, as customers who were stuck at home logged on to the online retailer to buy cheap clothes. The financials of its parent firm reflect this rise.

Roadget Business, Shein’s Singapore-incorporated entity, generated US$21.6 billion of revenue in 2022, roughly 4x of the previous year, according to data from Alternatives.pe.

While cost of sales and selling and marketing expenses grew at around the same rate, Roadget Business achieved a net profit of US$634 million, up by over 3x from 2021.

Notably, Shein expanded rapidly into South-east Asia in 2022, not long after moving its parent firm to Singapore from China.

Leonard Lin, Shein’s general manager for Singapore, previously told Tech in Asia that the company viewed the city-state, Thailand, Malaysia and the Philippines as key markets for growth.

Some of Shein’s investments in these markets involved handling offline events such as pop-up stores and strengthening its regional delivery network.

The company’s net cash used in investing activities hit US$669 million in 2022, mainly due to its US$483 million purchase of short-term financial products. While Shein’s holding firm did not specify what these products were, they are typically liquid assets that are bought to hold cash for future opportunities.

Shein also ended 2022 with US$2.26 billion in net cash from operations.

Tech in Asia has reached out to Shein for comment.

Subsidiaries of Roadget Business include Shein Service Philippines, Guangzhou Shein International Import and Export, Singapore-based Fashion Choice, and Brazil-based In Glow.

Roadget Business also has two Ireland-based units: Infinite Styles Ecommerce and Infinite Fashion Ecommerce. The latter wholly owns US-based Shein Distribution.

Roadget Business’ 2022 revenue result places it behind Zara parent firm Inditex, which recorded 32.6 billion euros (S$47.5 billion) in net sales in the same year. The Spain-headquartered company owns other fast-fashion brands such as Bershka and Pull & Bear.

But Shein’s Singapore entity leapfrogged another rival, Sweden’s H&M Group, which registered 21.2 billion Swedish krona (S$28.7 billion) in net sales for 2022.

Roadget Business was well positioned for further growth in 2023, with Shein acquiring a one-third stake in Sparc Group – the US-based parent of Forever 21 – in August of that year. The deal gave Shein access to Forever 21’s strong offline presence, while the latter expanded its brand distribution through Shein’s online channels.

Shein had also announced that it was acquiring Missguided, a UK-based women’s fashion brand, in October 2023. This widened Shein’s online catalogue, as Missguided’s products and collections became available on the former’s platforms.

Roadget Business has the war chest to do deals, with its 2022 financial filing showing it had US$3 billion in cash and cash equivalents at the end of the year.

While the company’s 2023 financials have yet to be released, the Financial Times reported earlier this year that Shein logged over US$2 billion in profit in 2023. Meanwhile, Shein’s gross merchandise value – indicative of total sales – rose to around US$45 billion in the same year.

The company is carrying this momentum towards its debut on the public markets. Shein, which was last valued at US$66 billion during a funding round in 2023, has reportedly filed for an initial public offering (IPO) in London. However, the timing of the listing remains uncertain.

The IPO has attracted controversy. Shein’s initial plans to list in New York were derailed by tensions between the US and China, where the company still sources its products.

The market in Hong Kong, meanwhile, is on an extended downturn.

Even in the UK, which is struggling to attract more IPOs, senior members of parliament have called for greater scrutiny into Shein.

A Shein spokesperson said the company is setting aside “millions of pounds” to bolster compliance and governance across its supply chain.

At this point, though, a UK listing might be Shein’s best bet.

The Labour Party, which is expected to gain power in the UK elections next month, previously met with Shein. A representative of the political party said that “raising investment, productivity and growth is one of Labour’s missions for the government.” TECH IN ASIA