Shein Stock Drops 10% Following Contact Lens Recall in Australia and New Zealand

Shares of fast-fashion retailer Shein dropped as much as 10% in Hong Kong trading on Monday, following an urgent product recall initiated by regulators in Australia and New Zealand over contaminated contact lenses.

According to a statement released Friday by New Zealand’s Ministry of Business Innovation and Employment, a sample from the cosmetic contact lenses tested positive for the Burkholderia cepacia complex, a bacterial contaminant found in the packaging solution. Officials warned that exposure to this bacterium can cause eye infections or irritation, noting that an incident involving a user who developed an eye infection had already been reported in the United Kingdom.

The Australian Competition and Consumer Commission issued a similar recall notice for the colored contact lenses, which were marketed for cosplay and makeup applications.

The regulatory action comes shortly after Shein’s initial public offering in Hong Kong earlier this month. While the company has seen rapid growth driven by its low-cost model and fast turnover of trendy designs, it has faced mounting pressure in European and U.S. markets due to rising tariffs and shifting regulatory landscapes.

Market analysts suggest the retailer must evolve beyond its strategy of offering cheap, constantly changing inventory. Marguerite LeRolland, senior global insight manager for fashion at Euromonitor International, told CNBC earlier this month that Shein needs to redefine its value proposition by curating its marketplace offerings and developing additional services. She also emphasized the importance of improving the company’s brand image as scrutiny from regulators and the public intensifies.

By the close of trading, Shein’s Hong Kong-listed shares had fallen 9.49% to HK$36.26.