In key news from the UK market, China-based fast fashion group Shein is reportedly targeting a potential IPO (initial public offering) on the London Stock Exchange, valuing the company at around £50 billion. The move comes as the company’s U.S. listing plans faced setbacks due to regulatory pressures and the growing tensions between the U.S. and China.
According to Sky News, Shein could file its IPO prospectus with the UK regulators as early as next week. However, British lawmakers are seeking greater scrutiny of the Chinese retailer and raising questions over its London listing. In response, Shein has pledged to improve governance and compliance standards.
Headquartered in Singapore, Shein is a fast-fashion brand offering an affordable range of trendy items and products. The company caters to customers in over 150 countries through its online platform.
Shein’s U.S. Dreams Crushed
In November 2023, Shein submitted its IPO filing for the U.S. listing, aiming to become one of the largest IPOs in recent years. However, the company faced challenges due to escalating tensions between the U.S. and China, along with regulatory obstacles.
Earlier in May 2023, Shein attained a valuation of approximately $66 billion during a fundraising round, but it was targeting an even higher valuation through the U.S. IPO.
The Rise of Shein: Disrupting Fashion
In just 11 years, Shein has disrupted the clothing industry with its low-cost offerings, becoming one of the largest fashion brands globally. According to the Financial Times, the company’s profits soared to over $2 billion in 2023. In a short period, Shein has gained huge popularity among online shoppers in terms of its competitive pricing, relevance, platform experience, and swift response to fashion trends.
In the UK market, Shein has exerted pressure on local online fashion giants such as ASOS PLC (GB:ASC) and Boohoo Group (GB:BOO). Shein is progressing at a time when these retailers are struggling to keep up their sales following the pandemic boom.
In the first half of FY24, ASOS announced a pre-tax loss of £270 million and an 18% decline in adjusted revenue on a constant currency basis. Rising competition presents an opportunity for ASOS to address shortcomings in its system by prioritizing a user-friendly experience while offering trending clothing at affordable prices.
Meanwhile, Shein continues to strengthen its presence in key markets. In October 2023, the company bought the Missguided brand name from Frasers Group (GB:FRAS) to revive the brand and attract a larger share of young shoppers in the UK market.
Is ASOS Stock a Buy?
Amid rising competition and macro pressures, ASC stock has received a Hold consensus rating based on two Buys, five Holds, and three Sell recommendations from analysts. The ASOS share price forecast is 387.78p, which is 4% higher than the current trading level.
