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text|kongkong

recently, popular chinese concept stocks have experienced widespread gains again. just as chinese assets are being sought after, shein, which has been preparing to go public in the uk, has laid off employees.

according to multiple media reports, the layoffs involve the shein singapore production and research team. as usual, companies planning to go public are usually very careful about layoffs before going public. shein's twists and turns in listing plans have once again become confusing.

previously, the global times reprinted a report stating that after shein's plan for an ipo in the united states was stalled, it planned to use a new dpo model (no new shares and no financing) to list in the uk in the second half of this year. the latest valuation was us$66 billion, compared with the high point has shrunk by more than 30%. media analysis said that in just two years, shein’s valuation has not only shrunk significantly, but its listing only tends to provide an exit channel for old shareholders.

it is not difficult to understand that the valuation has shrunk, and third-party data further confirms the company's fundamentals.after sorting out, it was found that multi-dimensional data disclosed by third-party organizations showed that shein is showing a continuous decline in user evaluations, user visits, revenue growth, and other important indicators related to development expectations.

01

user visits have been declining for four consecutive years, with visits falling by 24% in the past four months.

according to statistics from sitejabber, a third-party agency, shein's user rating has declined for four consecutive years, from about 2.5 points in 2020 to 2 points, a decline of more than 25%. the rating uses a 5-point scale, and 2 points is only equivalent to satisfaction. degree is less than 40%.

in addition to the decline in user ratings, shein's user visits in the past four months have also dropped by more than 24%. according to statistics provided by the semrush website, shein user visits have been declining since march 2024. among them, shein's user visits peaked at around 250 million in march. from april to july, user visits dropped to 190 million. in just 4 months, the decline exceeded 24%.

looking at different channels, the performance of the pc channel was relatively stable, and the decline in user visits was mainly due to the continued decline in mobile visits.

(picture: screenshot of shein user visits statistics by channel from february to july from semrush website)

in fact, the onset of this recession seems to have been foreshadowed before. according to a report released by cbs news at the end of 2023, a morning consult survey found that shein’s popularity among young consumers appears to be declining, with the proportion of generation z adults considering shopping on clothing websites declining compared to last year. 7 percentage points.

data from apple’s app store official website shows that among shopping apps, shein, the former number one cross-border e-commerce player, has been replaced by competitors.industry research reports released by brokerages also confirmed this. relevant reports show that shein’s top1 position has been replaced by competitors in many core key markets, including the united states, europe, japan, etc.

(source: china merchants bank research report - global app download rankings of the "four little dragons" of e-commerce overseas)

02

shein raises prices significantly to offset revenue

looking further, both user visits and user evaluations are a priori indicators and have certain reference value. however, in terms of listing valuation, the main financial indicators to be referenced are revenue and net profit. among financial indicators, revenue growth is a more direct indicator for judging the prospects of a listed company.

judging from this growth prospect indicator, it seems that shein's original high-growth myth has been shattered. according to data from ecdb, a third-party e-commerce data platform, shein's revenue growth rate was approximately 238% from 2020 to 2023, declining to around 32%. this not only made the original ultra-high-speed growth expectations come to nothing, but also threw dust on the listing plan.

fashion magazine bof previously reported that after years of explosive growth in the united states, shein's sales began to slow down sharply in early 2022, according to earnest research. and points out that this may be because the novelty of its endless array of fast-fashion clothing wears off.

but for a company that wants to go public, revenue data is very critical.therefore, for shein, revenue is almost a data that must be boosted. under the premise of losing users, one of the few options is to raise prices. in fact, shein did exactly that.

according to a report by fast company in june 2024, citing data from london research company edited, shein's average price increase exceeded that of its competitors zara and h&m as of june this year, and the price increase of shein's core products was up to more than 33%.

among them, the average price of shein's women's clothing in the united states has increased by 28%, the average price of a dress in the united kingdom has increased by 15% from a year ago, and the average price of dresses sold in germany, france, italy and spain has increased by 36%. %. among them, the united states, germany and the united kingdom are the top three markets with the highest revenue share.

03

there is no choice but to raise prices significantly, or there may be backlash

it can also be seen at this point that with the loss of shein access users and the loss of the first position in key markets, shein wants to boost its valuation by increasing revenue. the remaining options include accelerating mergers and acquisitions. there are options such as rapid global expansion and increasing unit prices.

now it seems that the side effects of price increases are quite obvious, so what is the effect of rapid mergers and acquisitions and global expansion?

according to a report by cnbc at the end of june 2024, forever 21, a struggling offline fast fashion brand in the united states, is once again facing serious financial problems due to rapid decline in sales, and is asking some landlords for a 50% rent discount.

it now appears that forever 21’s situation has not improved eight months after shein became a shareholder.the report pointed out that forever 21’s delay in paying suppliers has worsened. creditsafe data shows that at the end of 2023, forever 21’s payments to some suppliers were overdue for more than 70 days.

the operating conditions of forever 21 not only significantly affect the performance of sparc group, but may also further drag down shein. it is understood that forever 21, which had more than 800 stores in the united states and other places in 2019, filed for bankruptcy protection due to poor management and closed hundreds of stores without solving the problem. it was acquired by sparc group.

at the end of august 2023, shein acquired a 30% stake in forever 21 parent company sparc group. the associated press ap once reported that neil saunders, managing director of global data retail, analyzed that forever 21, which is struggling in the fast fashion industry, hopes to use shein's high growth momentum to get out of trouble. now it seems that the desire to escape poverty has evaporated. shein hopes to gain recognition from local industry associations and political circles in the united states by investing in sparc, but this wish has basically backfired.

in the first half of 2024, according to cnbc reports, shein tried to apply to become a member of the national retail federation (nrf) many times, but was rejected. even the original ipo plan in the united states was almost hopeless.

multiple media reports show that in 2023 shein will acquire a 30% stake in sparc group, the parent company of fast fashion women's clothing brand forever 21. in the same year, shein also acquired missguided, a fast fashion brand owned by the british frasers group. moreover, related investment and merger projects are still expanding. in fact, both forever 21 and missguided have been tested by the market and basically failed. shein has not yet demonstrated the ability to bring these brands back to life.

at this point, the hidden dangers of being dragged down by mergers and acquisitions have also begun to appear. the previous large price increases seem to have side effects and will further accelerate the loss of users.but before the negative effects of price increases and rapid mergers and acquisitions have fully emerged, this is a rare window period for shein to go public. whether it will be broken or not depends on the progress of shein’s listing.

there are not many opportunities left for shein.