Shein notched its highest profit ever during the first half of this year, the company told investors in a letter, as rumors swirl over whether the fast-fashion juggernaut will file for a U.S. public offering.
The missive Wednesday from Executive Vice Chairman Donald Tang, which was obtained by CNBC, noted sales volume growth accelerated and profits improved during the first half of 2023 compared to the latter half of 2022.
“We recorded the highest first half net profit in the company’s history, compared to a near break-even during the same period in 2022,” Tang wrote in the letter. “In particular, our continued momentum in the U.S. reinforces our leading position in the market.”
The Chinese apparel company has used its wide selection of low-priced dresses, crop tops and jeans to win over Gen Z and millennial shoppers and cement itself as a leading retailer in the crowded fast-fashion space.
The company brought in $23 billion in sales in 2022 and is now worth $66 billion, according to a May report from the Wall Street Journal, which cited people close to the company.
Shein has long focused on churning out thousands of new styles based on the latest trends, but the company has also worked to grow its marketplace.
The program brings in third-party vendors who sell a wide variety of goods to Shein’s customers. It allows the retailer to boost its revenue, deliver products faster and capture new shoppers without the headache of production and inventory management.
In the letter, Tang delved into Shein’s marketplace strategy and its recent launch in Brazil and the U.S. He told investors the total value of merchandise sold since the beginning of 2023 has tripled to nearly $100 million in Brazil, with 6,000 active marketplace sellers.
“This now makes up over one-third of Brazilian total [gross merchandise value],” Tang noted. “In addition, we are continuing to expand the product categories on our marketplace beyond fashion and apparel to other categories, including home appliances and other home products.”
Shein announced the launch of its marketplaces in Brazil and the U.S. in May. The company also has plans to start marketplaces in Mexico, along with Germany, Spain, France and Italy.
Tang didn’t disclose how the program has fared so far in the U.S.
IPO rumors swirl as congressional scrutiny intensifies
Shein, which is reportedly mulling a U.S. public offering, faces mounting scrutiny over its trade practices and supply chain, along with accusations over intellectual property infringements and the use of forced labor. The company denied the IP accusations and has said it has “zero tolerance” for forced labor.
In June, the House Select Committee on the Chinese Communist Party released a report criticizing Shein’s use of the de minimis rule, which allows retailers to import products into the U.S. duty-free and with less scrutiny as long as the packages are valued under $800.
On Tuesday, Tang sent a letter to the American Apparel and Footwear Association calling on the industry to work toward reforms to the de minimis rule. He told investors in the Wednesday letter that Shein has followed the law as written, but it’s “simply not critical to the success” of the business.
“Reforms should create a more level, transparent playing field–one where all retailers play by the same rules, and where the rules are applied evenly and equally, regardless of where a company is based or ships from,” Tang wrote Wednesday. “We welcome the opportunity for constructive engagement with Congress, the Biden Administration, and others in the industry to determine the specific reforms needed.”