Shein reported on Monday, Sept. 28, 2026, that its adjusted net profit for the second quarter fell 67% compared to the previous year. The Singapore-headquartered fast-fashion company, which debuted on the Hong Kong stock exchange on Sept. 1, reported $228 million in adjusted net profit. While the company returned to profitability following a $99 million loss in the first quarter, its net profit margin decreased to 2.1% from 6.2% a year ago.
The company attributed the margin decline primarily to rising fulfillment costs, which grew 18.1% due to higher jet fuel and freight expenses linked to conflict in the Middle East. Revenue for the quarter ending June 30 reached $11.08 billion, a 0.9% increase year-over-year. Growth in Latin America helped offset sales declines in Europe and the United States.
Sales in Europe fell 13.9% to $3.77 billion, while U.S. revenue dropped 6% to $2.5 billion. In anticipation of new European Union (EU) fees on low-value e-commerce parcels, the company raised prices and reduced its online advertising spend during the quarter. Shein CEO and Chair Sky Xu stated that the company plans to move toward higher-priced brands and increase its inventory within Europe to improve profitability.
For consumers, the shift in strategy follows changes in the price of goods and delivery costs. Starting July 1, the EU began imposing a 3-euro fee per product category on low-value parcels, which Shein reported could cost a shopper up to 15 euros extra for an order containing five different types of items. Residents in the EU also face a planned 2-euro handling fee starting Nov. 1. To counter these costs, Xu indicated that the platform's overall average selling price will rise as the product mix moves toward higher-end brands.
The company is adjusting its logistics infrastructure to mitigate these regulatory changes, having opened a 740,000-square-meter warehouse in Wroclaw, Poland, and recently leasing an additional 66,000 square meters. The success of this transition into higher price points and localized warehousing will likely determine the company's ability to maintain its market share in Europe, which accounts for approximately one-third of its revenue. Investors are now looking toward third-quarter results to assess the full impact of the new EU customs fees and any further acquisitions the company may pursue to diversify its brand collection.