Shein’s planned Hong Kong listing is asking investors to assess two unresolved threats inside its US business at the same time. Tariff changes have already reduced sales and raised fulfilment costs, while an undisclosed FTC investigation could produce a settlement or other outcome in what the company says may be the near term.
The fast-fashion retailer revealed the investigation in its draft prospectus filed with the Hong Kong Stock Exchange. Shein said it is cooperating with the FTC but cannot predict when the investigation will end or how it will be resolved. It warned that the result could require “significant monetary payments” with a material effect on its finances.
The filing does not explain what the FTC is examining, when the agency opened the investigation, or how much Shein could be required to pay. An FTC spokesperson confirmed to Reuters that the agency is conducting a consumer-protection investigation.
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The regulatory uncertainty is concentrated in a market that generated $10.10 billion, or 24.1%, of Shein’s $41.85 billion in 2025 revenue. US revenue fell 14.3% year over year to $2.04 billion during the first quarter of 2026, reducing the country’s contribution to 22.5% of total sales.
Shein attributed the contraction partly to the removal of the US de minimis tariff exemption and higher duties on Chinese imports. The company has raised prices to pass on most of the added costs and moved orders into more complex customs-clearance procedures. Fulfilment expenses rose 12.8% to $4.32 billion during the quarter, reaching 47.7% of revenue from 42.8% a year earlier.
Marketing expenses increased 31.4% to $1.43 billion, including a rise in advertising spending to $1.10 billion. Those costs helped compress quarterly operating income by 25.9% to $258 million, even as total revenue increased 1.1% to $9.05 billion.
Shein reported a net loss of $99 million for the quarter, compared with net income of $395 million one year earlier. The result included a $328 million fair-value loss tied to convertible redeemable preferred shares. Full-year net income had already dropped 38.7% to $2.06 billion in 2025 despite revenue growth of 8.0%.
The FTC investigation is part of a broader compliance burden disclosed in the prospectus. France’s competition and consumer-protection authority reached a €40 million settlement with Shein in July 2025 over historical pricing displays and environmental claims. The French privacy regulator CNIL separately imposed a €150 million penalty over cookie-consent practices, which Shein has appealed.
French authorities imposed a further €22.5 million in administrative fines in June 2026 involving order confirmations, withdrawal rights, product-traceability disclosures, and environmental information. Shein disputes those findings and is contesting both sanctions.
The European Commission also opened formal Digital Services Act proceedings in February over alleged risks involving illegal products, potentially addictive platform design, and recommender-system transparency. Ireland’s Data Protection Commission opened another inquiry in April into transfers of European user data to China. Both matters remain unresolved.
Shein secured Chinese regulatory clearance for the Hong Kong offering in July after earlier attempts to list in New York and London stalled. Reuters reported that the company could target a $40 billion to $50 billion valuation and list as early as September or October, citing an unnamed source.
