Shein, the fast-fashion retailer, reported a steep 67% drop in adjusted profits for the second quarter, marking a challenging start to its life as a public company. The company’s latest financial results, released following its initial public offering (IPO) on the Hong Kong Stock Exchange earlier this month, showed adjusted profits fell to $228 million compared to the same period last year, while revenue edged up less than 1% to $11.1 billion.

Xu Yangtian, Shein’s chair and founder, attributed the sharp decline in profitability primarily to a significant increase in oil prices and freight costs driven by geopolitical tensions in the Middle East. Xu also warned that the external environment would remain volatile in the second half of 2026, with continued pressure from tariffs and fluctuating logistics expenses.

Shein, which is based in Singapore but founded in China, gained rapid popularity during the COVID-19 pandemic by selling inexpensive clothing directly to Western consumers via its online platform. The company had previously reached a valuation of $100 billion during a 2022 funding round, briefly ranking it as one of the world’s largest private firms. However, its initial public offering came at a discounted valuation of approximately $26 billion.

Since its listing, Shein’s stock price has declined nearly 28%, partly due to investor concerns over new international trade levies. In the past year, the United States tightened enforcement of customs duties by closing the “de minimis” loophole, which had exempted low-value shipments from tariffs. Meanwhile, the European Union introduced a flat €3 charge on shipments valued under €150 starting in July, potentially affecting Shein’s cost structure.

During the quarter ending in June, Shein generated over one-third of its revenue from Europe and just over 20% from the United States, highlighting the importance of Western markets to its business. Despite the challenges, Xu expressed cautious optimism that key retail periods such as Black Friday and the Christmas season would contribute to improved profitability in the latter half of the year.

The company also reported net profits of $2.4 billion for the quarter, a significant turnaround from a net loss of $99 million in the previous quarter and more than triple the net profit recorded a year earlier. Shein attributed this increase primarily to changes in the valuation of convertible preference shares, though it did not provide further details on the matter.

Overall, Shein’s latest results underscore the complex landscape facing fast-fashion retailers amid shifting geopolitical and trade conditions, even as the company seeks to solidify its standing in public markets.