Fast fashion retailer Shein raises prices ahead of IPO

Chinese fast fashion retailer Shein, known for its $5 tops and $10 dresses made in China, has raised prices by more than a third on some staples in a move that could boost its earnings ahead of the offering planned initial public offering (IPO), according to an analysis of its pricing strategy cited by Reuters.

Shein's average price increases outpaced rivals H&M and Zara, according to data from London-based research firm EDITED, which compared prices from June 1, 2024, to a year ago.

Shein declined to comment on the information published by Reuters.

The company operates an online marketplace that sells a wide range of merchandise, although its core business is the production and sale of Shein's own brands, primarily women's clothing. Shein uses a network of suppliers that are mostly based in China, which differs from traditional manufacturing processes. Most of the clothing that Shein sells is made in Guangzhou, China by its approximately 5,400 suppliers.

Although Shein does not publicly disclose financial data, Coresight Research estimates the company's revenue will reach $50 billion this year, up 55 percent from last year's figure. With its core womenswear products being more expensive and more external brands selling on its website, Shein will be able to hit that sales figure and increase its profits.

"Shein has recently experienced a very strong momentum that could play a favorable role in its IPO plans," said Erik Lautier, e-commerce expert at consulting firm AlixPartners.

As it prepares for its initial public offering (IPO), Shein faces higher listing costs. Shein also has to comply with new EU regulations on online platforms, which could increase its expenses, putting pressure on profit margins.

In the United States, Shein's biggest market by sales, the company increased the average price of women's dresses by 28 percent in the year ended June 1 to $28.51, according to EDITED data. While still well below the average price of an H&M ($40.97) or Zara ($79.69) dress in the U.S., Shein raised prices by a higher percentage than its rivals over the same period, according to the data quotes.

On Shein's UK site, a dress costs an average of £24.12 ($30.97), 15% more than a year ago, while in France, Germany, Italy and Spain a dress is 36% more expensive.

Shein wants to prove it can sustain its recent growth and sell more products at higher prices before going public, retail experts say.

Shein is targeting a valuation of around £50bn in a London listing, according to Sky News. The company declined to comment on its IPO plans or valuation.