Rise and Shein
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
Financial markets in the UK could be about to get an unexpected boost. Shein, the online fashion retailer and one of the fastest-growing companies in the world, is considering an IPO in London.
Shein is looking at listing in London because it is concerned that US regulators will block a listing in New York, according to a story by Bloomberg, which you can read here. Jeremy Hunt, the chancellor, met Shein's executive chairman, Donald Tang, earlier this month to promote the idea of the company listing in the UK, according to a story by Sky News here
Shein was founded in China and is now based in Singapore. The company’s links to China have concerned US authorities because the company has grown rapidly and amassed data on millions of customers around the world.
If Shein listed in the UK then it would be one of the biggest-ever stock market flotations in the country.
London’s reputation as a financial centre has suffered a series of blows after companies such as Arm chose to list their shares elsewhere.
The Bloomberg story on Shein includes an eye-opening stat that just $1 billion (£788 million) was raised through IPOs in London last year. That is the lowest number for decades. In contrast, Shein would seek a valuation of at least $80 billion, according to preliminary documents filed in the US last year.
Shein offers clothes at bargain prices - as little as £2 for a T-shirt - and has become renowned for the speed at which it refreshes its fashion range and delivers new products to customers. The company constantly updates the products on its website. It uses algorithms to identify popular items and then manufactures them using suppliers close to its hub in Guangzhou, China.
Shein only launched in the UK in 2020 and last October bought the online brand Missguided from Mike Ashley’s Frasers Group
If you want to understand Shein in more depth I highly recommend reading two pieces. Firstly, the Wall Street Journal did a profile on of Sky Xu, its founder and chief executive, last December. This is an extract on why Shein has done so well:
Under Xu’s leadership, Shein has pioneered a hyper efficient supply chain that uses algorithms to swiftly predict customer demand and cater to their preferences. It places orders in small quantities to test the market appetite and replenish orders on demand. This model ensures Shein can pump out thousands of new styles every day and sell most of what it has made: Shein says only 2% of its clothing is unsold, far below the industry average of 30%.
You can read that piece in full here.
Secondly, The Sunday Times reported last September that the company had recorded sales of £1.1 billion in its first 16 months of operation in the UK. That fact underlines the extraordinary growth of the company. You can read the Sunday Times story here
This is a story to watch over the coming weeks. Whether the UK should try to attract a company if is rejected by US regulators is a matter for debate…
Podcast…
The new episode of our Business Leader podcast has been released today and it is the second part of a story about B&M. In this episode we look at B&M’s transition from a promising medium-sized business to a FTSE 100 giant and speak to Simon Arora about why he stood down as chief executive after nearly 20 years in charge.
You can listen to the episode on Substack here, Spotify here and Apple here
If you missed part one of the B&M story, you can find it here
Other stories that matter…
1. Jeremy Hunt is looking to cut National Insurance in the Budget next week and introduce a new tax on vaping, according to a story by The Times, which you can read here. This story has emerged after the Institute for Fiscal Studies warned that the tax burden on households is heading to the highest levels since the end of the Second World War no matter what the chancellor does. The IFS also warned that Hunt’s spending plans include unspecified spending cuts and will “lack credibility and transparency until he tells us where he intends to find those cuts”. You can find the full report from the IFS here
2. The chairman of Nisbets said the family-owned businesses had found a buyer with a “shared vision and a commitment to customers and colleagues” after FTSE 100 company Bunzl agreed to buy an 80 per cent stake for £339 million. Andrew Nisbet founded Nisbets in 1983 and it supplies catering equipment. The company is based in Bristol and now has more than 1,800 employees. Nisbet will remain a non-executive director in the business and the family will retain a 20 per cent stake. Peter Sephton, who has been chairman and chief executive since 2020, added: "The acquisition will help drive our strategy for growth by bringing both strategic and operational value to Nisbets.” You can read more on the deal here
3. A collection of UK businesses that use Amazon to sell products are facing collapse because they cannot get access to their funds, according to a report by The Times here. The issue is linked to Amazon asking traders to verify their status as a UK or international business to meet HMRC rules. Amazon said: “We are taking this situation extremely seriously, committing additional resources to improve and speed up the process.”
4. I recommend reading this great piece on the power of word-of-mouth by Nilanjana Roy in the Financial Times. The piece is about books but those who have listened to our podcast with Simon Arora will know the power that word-of-mouth has in business too. “There is nothing more evangelical than a reader who truly loves a book,” Roy writes. You can read the column here
5. Is it ok to have a meeting at 8am? That is a question asked by The Wall Street Journal in a new feature. The answer is more complicated than you may think, although it still appears to be “no” for most people. One 36-year-old worker is quoted as saying: “If I have to push myself to an 8 o’clock meeting, I really had better have a good reason for being there.” You can read the full piece here
The new Business Leader…
The new Business Leader website and magazine have now launched. We are building a new inspirational, aspirational and agenda-setting business publication for the UK. You can read our analysis, interviews and expert columnists on our website by clicking the image below. Our new magazine is on its way to shops and you can subscribe to your own print or digital version by clicking here
And finally…
A fascinating video of Jeff Bezos talking about how to hold internal meetings is being shared on LinkedIn. Bezos, the founder of Amazon, talks about why meetings should avoid PowerPoint presentations and focus around written six-page written memos that everyone reads together. You can find the video here
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