Shein overtakes Asos in UK as sales hit £2.58bn

Online fast-fashion retailer Shein has overtaken British rival Asos in the UK after sales rose 26% to £2.58bn last year. The company, founded in China, saw its UK division’s pre-tax profits climb 18% to £45.2m. The figures were disclosed in accounts filed at Companies House.

Marketing push and pop-up shops drive growth

Shein’s expansion was helped by marketing partnerships with the Wireless and Creamfields music festivals. It also ran a pop-up shop on London’s Oxford Street and held Christmas gift events in Edinburgh, Manchester, Liverpool, and London. UK employees rose to 113 from 91 the year before, mostly in sales and marketing. The company paid £11.2m in current tax, mainly corporation tax, up from £9.6m.

But the strong results are likely to increase pressure on the government over the “de minimis” rule, which underpinned the rise of Shein and Temu. The rule allows overseas sellers to send goods valued at £135 or less directly to British shoppers without customs duty. Former UK chancellor Rachel Reeves said the UK would get rid of the rule by 2028, but major retail bosses said the government should move sooner.

Shein’s model involves shipping cheap clothes orders from Chinese factories to homes, with each order low enough in value to avoid import duties. The US revoked its de minimis exception for Chinese-made goods last year, crimping Shein’s expansion there. The EU began phasing out its customs duty exemption for low-value parcels in July, replacing the €150 relief with a flat €3 customs duty.

Investors’ concerns about global regulatory changes meant Shein’s value at its Hong Kong listing last month was far lower than expected. The global parent group was valued at just over $26bn (£19.6bn), compared with a $100bn valuation in an April 2022 fundraising round. Shein had considered a £50bn float on the London Stock Exchange in 2024 but eventually launched in Hong Kong.

Shein was founded by entrepreneur Chris Xu and runs most operations from China, selling all goods outside the country. It moved its headquarters to Singapore at the start of 2022 and recently began manufacturing in Turkey and Brazil. After forced labour concerns were raised, Shein said it tightened supplier policies and enforced them through regular audits, with child or forced labour violations grounds for immediate termination of contract. Last week, Shein reported a 67% fall in group quarterly profits to £173m in its first results since the float. It blamed higher oil prices and freight rates linked to war in Iran.