Shein, the rapidly growing fast-fashion retailer, reported a sharp decline in European sales in the second quarter of 2026 following price increases and a reduction in online advertising. The company attributed these changes to the European Union’s implementation of new fees on low-value e-commerce parcels, which took effect on July 1. Despite this geographic setback, Shein’s overall sales grew modestly by 0.9 percent compared to the same period last year, driven largely by expansion in Latin American markets.

The company disclosed revenue of $11.08 billion for the second quarter, with European sales dropping 13.9 percent to $3.77 billion and U.S. revenue falling 6 percent to $2.5 billion. Shein’s shares, which debuted on the Hong Kong stock market on September 1, have declined by 27.3 percent since the initial public offering.

Chief Executive and Chairman Sky Xu addressed the challenges posed by increasing tariffs, import duties, and logistics costs, citing these factors as drivers of an uncertain external environment expected to persist through the latter half of the year. In response, Shein is pursuing a strategic shift toward higher-priced clothing lines to enhance profitability and diversify consumer options. Xu highlighted the company’s plans to expand its family of brands through acquisitions, including the recent purchase of the U.S. apparel brand Everlane for $78 million as part of this upmarket move.

Shein’s interim filings revealed a turnaround in profitability, with net income reaching $2.4 billion in the quarter ending June 30, contrasting with a net loss of $99 million in the previous three months. While net revenues increased slightly to $11.1 billion year-on-year, the company anticipates the significant sales periods of the fourth quarter—featuring major shopping events such as China’s Singles’ Day, Black Friday, Cyber Monday, and the Christmas season—will provide a substantial boost in orders.

Further signaling its shift in market positioning, Shein unveiled its autumn and winter collection at a fashion event in Milan, underscoring its move beyond low-cost fast fashion toward a broader product range priced to appeal to wider consumer segments. The company emphasized that as its product mix gravitates toward higher-price offerings, the average selling price on its platform is expected to rise accordingly, reflecting its evolving business model amid ongoing global trade challenges.