What Does Shein Get for Everlane?

Could it be all in the balance sheet?

By now you'll have read the headlines and seen the opinion pieces. "Everlane, Shein and the Limits of the Ethical Consumer", "Does the Everlane Sale Mark the Death of Millennial Sustainable Fashion" and, "Shein Buys Everlane: The Liquidation of Radical Transparency".

But what if this purchase has nothing to do with sustainability at all?

On the face of it, Shein does not need Everlane. 

Shein have given $50 million to various organisations in recent years, that actually work to undo a lot of harm they cause. $5 million to the OR Foundation, who do great work, and this money has helped gain global traction for their 'Speak Volumes" campaign. (I'm not going to critise this partnership, even though it's glaringly obvious. The OR make a tangible difference, and sometimes, the end justify the means.) So, it appears Shein is already in a better position than Everlane from a pressing issue. On the face of it anyway.

Shein don't need Everlane's customers. According to the retail data, they pretty much have the same demographic. Given the % of people who consistently make good purchasing decisions, it would be like claiming the reason you can't get a job is migrants who brave the English channel. The numbers don't add up when you think about it. 

Although, there could be an argument that Everlane helps a Shein customer feel better about their purchases. A pair of jeans from Everlane might make that t'shirt from Shein feel less... icky. But I still don't see how that would create $100mil in value.

There is always the possibility that they wanted to use Everlane's verification platform, or whatever they use. Sounds plausible. Until you get an email from a consultancy firm telling you you can now do your CSRD paperwork using AI. Shein is a tech company, so if they have managed to smash the consumer algorithm with AI, then I would guess they have some pretty clever people who can do just that with legislation? The other problem with this is that the Chinese government don't want foreign powers snooping around their supply chains. And ignoring the fact that, without RFID technology, I'm not even sure Shein could tell you which facilities in the Panyu District of Guangzhou make which styles. 

Shein's production ecosystem is not the same as Everlane's. And again, technology is where Shein would win if they wanted transparency. As a tech company themselves, they are in a better position to build this than anyone else.

No, I'm not convinced it's any of that. I think the answer lies in the balance sheet.

The fastest way to "grow" a business is to either sell to another, or buy another. And this is becoming the playbook of late stage capitalism. 

Or, there is a breakdown in goodwill from the Chinese government. And I've got money that it's one of these.

According to the Financial Times, Shein's profit dropped 40% in 2024, and missed it's own revenue targets by $7 billion. They have lost an IPO in both the US and the UK. It's the fact that they walked away from both these countries over transparency issues. Rumours are they are looking to Hong Kong next, after China also said they weren't keen. Some reasons have been listed as keeping out foreign influence over data and supply chains. But not exactly the radical transparency Everlane claimed. 

Because Everlane is a private company, the turnover has not been reported. I asked ChatGPT twice, first answer I got was a $150 million higher than second at between $160-220 million. So, who the f*ck knows!

But if you want to raise your turnover by a billion, buying 4 brands for 40% of that outlay does make the business look more successful. It's the go-to solution for growing your turnover. It's why Wiggle purchased Chain Reaction Cycles. They needed to go from a £500BN company to a £750BN one in order for the owners, Bridgepoint, to make a sale. Even if that sale did result in the most dramatic insolvency in history, laid on a backdrop of corruption that spread across the EU.

Let's think about ASOS's purchase of Topshop for £265million in 2021. Saving the brand from liquidation. To only have the label's perceived value rescue ASOS from a Mike Ashley hostile take over a couple of years later by selling 75% (for £135 million) of the brand to the Bestseller founder. Some of that original purchase price went to loan repayments. Including £50 million to Philip Green himself (because he needed that). Whereas unsecured creditors did not see a penny. Including landlords and HMRC.

While we may sit around and say that a $90m debt is a lot for a brand with a turnover of £200m (ish). The majority owners of Everlane (pre Shein sale), manage equity capital of £39BN. So that Everlane debt is not quite what you'd be splitting hairs over. Especially when only $25M of debt belonged to L Catterton anyway. Even then, we don't know what has been agreed in the fine print of this sale. We don't know what debt repayments have been agreed, how much is unsecured, and whether any cash from Everlane is going to be transferred under this full ownership. 

We do know that the debt acquired from leasing real estate has not been transferred over to Shein, as Everlane left all retail spaces and offices prior to the buyout. 

Another problem that Everlane could solve for Shein is the small issues of US tariffs. For those of you not involved in the purchasing of goods manufactured in China, you may be surprised to learn that the Chinese government are subsidising tariffs through Chinese suppliers, who can land product cheaper than a US brand can. But only for brands they want to! China has invested a lot to control this access to the US market, but they can not make claims to have these tariff costs repaid. Who knows whether Shein has benefitted from this "investment in kind" from the Chinese government. But having a US based business that can make tariff claims for goods imported is certainly worth £100mil. We still have almost 3 years of Trump chaos left. 

I don't know the answer to why Shein bought Everlane, but its not for sustainability reasons. I do know why Everlane sold out though. Because the founder had sold to L Chatterton. And you don't get to acquire a balance sheet of $39BN by having a moral stance.