Shein Global Holdings Ltd. is investing €500 million ($563 million) in its European operations as the online fast-fashion retailer grapples with stricter customs regulations in its key market. The Hong Kong-listed company said Wednesday it is expanding its logistics hub near Wroclaw, Poland, a key center for its European business. The investment will add warehouse capacity and autonomous robots to help pick orders, and bring the site's total workforce to 10,000 by the end of the year.
Shein has had a presence in Poland since 2022, and the fresh investment comes as stricter customs regulations in Europe squeeze profit margins and challenge its core low-price appeal. The European Union started to charge a €3 duty on packages under €150 on July 1 to stem the influx of budget goods from overseas retailers like Shein, as well as rival PDD Holdings Inc.'s Temu. Cost pressures are set to climb even higher with an additional €2 handling fee taking effect this month.
Shein's sales slump in Europe has deepened in recent months, with year-on-year declines of more than 20% for most weeks in September and October, according to analytics firm Fable. Chief Executive Officer Sky Xu said in September that increasing local inventory in Europe, which accounts for about a third of Shein's $42 billion in revenue, was a key priority for the company. Shein's operating income plunged 53% in its fiscal first half, as Middle East conflict drove up freight costs while growth in its core retail business also slowed.
It warned the external environment would remain uncertain in the second half, with tariff headwinds and volatility in logistics costs persisting.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing