HONG KONG, September 29, 2026 (DAILYNWZ) — Shares of fast-fashion retailer Shein fell more than 6% on Tuesday after the company reported a 67% drop in quarterly profit, raising investor concerns about shrinking margins and weaker growth.
Adjusted net profit fell to $228 million in the second quarter, while the profit margin narrowed sharply to 2.1% from 6.2% a year earlier, according to the company’s results.
The decline came as higher jet fuel and freight costs, driven in part by the conflict in the Middle East, weighed on a business that relies heavily on air freight to deliver low-cost clothing to customers around the world.
Jefferies analysts estimated that Shein’s earnings were more than 10% below the lower end of the range implied by the company’s prospectus, highlighting the scale of the earnings shortfall.
The results added to a difficult start for Shein on Hong Kong’s stock market. Since its September 1 debut, the company’s shares had fallen 27.3% from their offer price of HK$48.56, equivalent to about $6.19, by Monday’s close.
The stock was trading around HK$33.40 on Tuesday before the decline of more than 6%, extending losses from its initial public offering.
Shein Chairman and Chief Executive Yangtian Xu said on Monday that increasing inventory levels in Europe was a key priority for the company. He also said Shein planned to expand into higher-priced clothing, a move aimed at improving profitability.
The strategy comes as the retailer faces pressure on the economics of its fast-fashion model. Its global delivery network, which allows shoppers to order inexpensive clothing directly from its platform, has also left the company exposed to fluctuations in air transport and logistics costs.
Shein’s latest results therefore put greater focus on whether it can protect margins while maintaining the rapid growth that helped drive its expansion and stock-market debut.
The company is also looking to change its product mix, with higher-priced items potentially offering more room for profit than its traditional low-cost clothing range. Xu said the European market would be an important part of that effort, particularly through higher inventory levels that could support local availability.