Shein Faces Tariff Squeeze as First-half Profit Falls 55.6%

by · WWD
A woman in a red dress walking in front of a Shein sign.Getty Images

Slowing sales growth and a sharp profit decline are exposing strains in Shein’s ultra-fast-fashion model as regulatory pressure mounts, according to its first earnings report as a public company.

In the first half of 2026, Shein generated $20.1 billion in net revenue, up 1 percent year-over-year. Operating profit fell 52.9 percent to $493 million, while adjusted net profit declined 55.6 percent to $499 million.

During the first six month ended June 30, Shein’s total order volume increased 6.4 percent year-over-year to 549 million orders. For the 12 months ended June 30, Shein had 291 million active customers, up from 254 million a year earlier.

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Improving profitability and addressing compliance issues amid rising policy risks in international markets and geopolitical uncertainty are emerging as key challenges for Shein.

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The company continues to contend with changes in global trade and shipping policies, including the additional 3-euro European fee that took effect July 1 and France’s ultra-fast-fashion levy that took effect Sept. 1, both of which are expected to put further pressure on its second-half financial performance.

By geographic region, Shein’s net revenue in the U.S. fell 6 percent to $2.47 billion in the second quarter, while Europe dropped 13 percent to $3.77 billion in the same period.

SKy Xu, the brand’s founder and chairman, detailed the company’s plans for the next one to two years — with a focus on pricing, quality and compliance, as well as consumer engagement.

“As the product mix shifts toward brands at higher price points, the platform’s overall average selling price will rise accordingly,” Xu wrote.

“Our competitive advantage stems from the efficiency gains of high inventory turnover, rather than cost compression at the individual product level,” Xu continued.

Shares fell 9.2 percent to a record low on Tuesday morning, leaving the company with a $17.3 billion valuation, down from around $26 billion when it went public on Sept. 1.