Quick Facts

• The Committee on Foreign Investment in the US launched a national security review of Shein’s $80 million acquisition of Everlane after the deal closed in May 2026.
• Shein voluntarily filed for CFIUS review after closing, an unusual step taken because Everlane’s financial situation required the deal to move quickly.
• Shein launched its Hong Kong IPO on August 24, seeking to raise up to $1.77 billion at a valuation of roughly $27 billion, down 72.5% from its 2022 peak.

US authorities are reviewing Shein’s acquisition of Everlane on national security grounds. The Committee on Foreign Investment in the US, known as CFIUS, began its review after the $80 million transaction closed in May 2026. No outcome has been announced. The Treasury Department, which leads CFIUS, declined to comment. CFIUS reviews are confidential.

Shein voluntarily initiated the filing after the deal had already closed, which is atypical. Companies usually seek CFIUS clearance before a transaction is complete. Shein said Everlane’s financial condition required the parties to move quickly, and the filing was not prompted by any government inquiry.

To handle the CFIUS process, Shein hired Phil Ludvigson of King and Spalding, a former senior Treasury official who helped build the office that pursues deals CFIUS may want to review. The review centers on whether Shein’s control of a company that handles Americans’ personal data poses a national security risk.

Rick Sofield, co-chair of Debevoise and Plimpton’s National Security Practice, said Chinese acquirers face particular scrutiny over data. “CFIUS often closely scrutinizes the acquisition of any large data sets, particularly those that include geolocational and financial information,” Sofield said. CFIUS specialists note that national security concerns in consumer deals typically arise from customer names and addresses, tracking cookies, or military discount programs that could expose service members’ identities.

CFIUS has the authority to block, unwind, or impose conditions on transactions it determines threaten national security. Clearance would shield the deal from future government challenges.

Everlane was valued at $100 million at the time of the acquisition, down from a peak of $600 million in 2020. The company was carrying $90 million in debt, including a $25 million term loan from Gordon Brothers and a $65 million revolving credit facility from CIT Northbridge. L Catterton, the LVMH-backed private equity firm, had invested $85 million into Everlane in 2020. Common stockholders received no payout from the sale.

Everlane’s revenue fell from an estimated $200 million around 2023 to approximately $170 million by early 2026. CEO Alfred Chang called the Shein deal “the start of a bigger chapter for Everlane” and said the brand would remain independent, keeping its sustainability commitments and brand values intact. The acquisition drew immediate public backlash from media commentators, influencers, and Everlane founder Michael Preysman, who had left the company years earlier.

The CFIUS review arrives as Shein faces pressure across multiple fronts. The company launched its Hong Kong IPO on August 24, putting 280 million Class B shares on the market. The offering is projected to raise up to HK$13.86 billion, or approximately $1.77 billion. Cornerstone investors including Tencent, Tiger Global, and General Atlantic have committed a combined $383 million. Final pricing is set for August 31, with shares expected to begin trading September 1.

Shein’s financial position has deteriorated. The company reported a $99 million loss in Q1 2026. Its 2025 net profit fell 38.7%. The US removal of the de minimis import exemption cut US revenue by 14.3%. Similar regulatory changes in Europe, Shein’s largest market, threaten further sales declines.

Shein has set aside approximately $80 million to cover ongoing legal and regulatory cases. Those include an FTC investigation, a European Union Digital Services Act probe, and data privacy cases in France and Ireland. The Everlane CFIUS review adds to that list as Shein tries to solidify its US retail presence through the acquisition of a California-based brand.

Read more: Shein’s Purchase of Everlane Faces US National Security Review