Shein's Acquisition of Everlane Undergoes US National Security Review
Shein, the fast-fashion giant founded in China, is facing a national security review regarding its $100 million acquisition of American clothing brand Everlane. This regulatory scrutiny comes as Shein aims to expand its presence in the US market, which has proven to be increasingly difficult for companies linked to China. The review was initiated after Shein proactively sought approval for the acquisition, which was announced in May 2026.
Everlane, once valued at approximately $600 million, has struggled financially, accumulating around $90 million in liabilities. The brand's majority owner, private equity firm L Catterton, was looking for an exit strategy when Shein approached them. For Shein, acquiring Everlane represented an opportunity to enter the upscale direct-to-consumer segment of the US market at a relatively low price. Everlane's CEO, Alfred Chang, emphasized that the deal would maintain the brand's independence and commitment to sustainability and quality.
The national security review highlights a broader trend of increased scrutiny by US regulators on Chinese companies operating within American borders. Shein, which relocated its headquarters to Singapore, has been navigating a challenging regulatory environment in the US for several years. Historically, the company has relied on the de minimis exemption, which allows packages valued under $800 to enter the US without duties. However, legislative efforts to close this loophole pose a significant threat to Shein's business model, which is built on offering ultra-low prices.
By seeking approval for the acquisition, Shein appears to be taking a proactive approach to address potential regulatory concerns rather than waiting for regulators to intervene. The acquisition of Everlane could provide Shein with a pathway to deeper market penetration, as Everlane's customer base tends to be older, wealthier, and more brand-conscious than Shein's typical demographic.
For Everlane's employees and customers, the uncertainty surrounding the acquisition adds to the challenges the brand has faced in recent years. The decline in Everlane's valuation from $600 million to a $100 million sale price reflects a difficult narrative, and a prolonged regulatory review or a failed deal could leave the brand in a precarious position, burdened with significant debt and lacking a clear future direction.
