HONG KONG: Shares of fast-fashion retailer Shein dropped more than 6% on Tuesday after it reported a 67% fall in quarterly profit, fuelling investor concerns over margin pressure and slowing growth.
Jefferies analysts estimated that earnings landed more than 10% below the low end of the range implied by Shein's prospectus.
Adjusted net profit was $228 million for the second quarter and its margin was squeezed to just 2.1% from 6.2% last year as conflict in the Middle East pushed up jet fuel and freight costs for the retailer that sends cheap clothes by air to shoppers around the world.
Since its September 1 stock market debut in Hong Kong to Monday's market close, Shein's shares have dropped 27.3% from the offer price of HK$48.56 ($6.19). The stock was trading around HK$33.40 on Tuesday.
Shein CEO and Chair Yangtian Xu said on Monday a key priority was increasing the amount of inventory in Europe and the company plans to push into higher-priced clothes that will boost its profitability. - Reuters
