Donald Tang, executive chair of Shein, reassures stakeholders about the company’s valuation and plans for a potential IPO in London amidst significant challenges and scrutiny.
Donald Tang, the executive chair of fast-fashion retailer Shein, recently addressed concerns about the company’s valuation as it prepares for a potential initial public offering (IPO) in London. Speaking to the Financial Times, Tang asserted that neither the company’s management nor its investors had expressed dissatisfaction regarding Shein’s current valuation, which stood at $66 billion during its last funding round in 2023. According to Tang, “To me, if anybody is not happy, they haven’t told me yet. I have only spoken to our existing shareholders — nothing but happiness.”
Despite some speculation that stakeholders may be pushing for a reduced valuation of around $30 billion, which could facilitate an IPO in the near term, Tang emphasized that there had been “zero conversations” about lowering the company’s worth. He stated, “When we are actually going public, there will be that question [about valuation], but we’re not going public right now… We had no conversation so far, zero.”
Originally formed in 2012 and now based in Singapore, Shein has encountered numerous challenges as it navigates its transition to a publicly traded company. After initially aiming for a public listing in New York late in 2023, the company shifted its focus to the UK following setbacks with the US Securities and Exchange Commission. Analysts remark that even with a significantly reduced valuation, a successful IPO would rank among the largest on the London market this decade, which has struggled to attract substantial international listings.
In 2024, Shein’s net profit is projected to drop by 40 percent to $1 billion, raising questions about its financial health amid intensified competition from rivals like Temu and recent changes to trade tariffs. A particularly notable change came when former President Donald Trump enacted additional tariffs on Chinese imports and suspended the “de minimis” exemption, which had allowed packages valued under $800 to enter the U.S. tariff-free. This has left Shein and other overseas retailers grappling with uncertainty over future logistics and operational costs.
Despite these challenges, Tang reported that investors remain optimistic about Shein’s operations, highlighting improvements in efficiency and profitability. He remarked that the company has maintained resilience through various disruptions, including those experienced during the COVID-19 pandemic, and has started global diversification in response to market fluctuations.
The timeline for Shein’s IPO remains uncertain. The company previously indicated that a listing could occur as early as April, but those plans might be delayed until the second half of 2024 as they navigate challenges, including evolving U.S. tariff regulations. “You’d want to IPO sooner than later,” Tang suggested when queried about the likelihood of a mid-year public offering.
Confidential IPO paperwork was submitted to the UK markets regulator in June, yet Tang refrained from divulging specific details about the anticipated IPO process or progress toward regulatory approval in both the UK and China. He highlighted the importance of transparency, stating, “By going through the listing process, the company can embrace the universal mechanism for accountability and transparency because there are requirements instead of optionality.”
Throughout its rapid expansion, Shein has faced scrutiny regarding its labor practices and supply chain ethics. Recent controversies included criticism from a British MP over the company’s lack of responsiveness to a parliamentary committee’s inquiries regarding cotton sourcing and allegations of forced labor in China’s Xinjiang region. In response to these accusations, Tang stated that Shein had communicated with MPs to clarify questions surrounding its practices. He added that the company’s cotton sourcing primarily comes from Australia and the U.S. and reiterated Shein’s commitment to a “zero-tolerance policy” towards forced labor.
Tang expressed confidence in London as an ideal location for an IPO, citing its favorable time zone, language, and high standards for legal and political separation, stating, “It has…one of the highest standards for accountability.” The company’s journey toward public listing continues as it navigates the complexities of an evolving global retail landscape.
Source: Noah Wire Services
