Shein, the online fast-fashion retailer founded in China, doubled profits at its UK arm last year as sales jumped by nearly 40% to £1.5bn – making it about the same size as its rival Boohoo.

The company, which is considering a £50bn float on the London Stock Exchange, said pre-tax profits at Shein Distribution UK rose to £24.4m, on which it paid £5.7m in income tax, according to accounts filed at Companies House.

The rapid rise of Shein, which bought the Missguided online brand from Mike Ashley’s Frasers Group last year, has piled pressure on UK online fashion retailers including Asos and Boohoo.

The new competitor is gaining ground just as British online fashion retailers face a squeeze on demand after the pandemic boom.

Competition from high-street retailers such as Primark, and the expansion of Next, Marks & Spencer and John Lewis into selling a wider selection of brands online, has also made life tougher for online fashion companies.

Meanwhile, many young people are turning to fast-growing secondhand trading platforms including Vinted and Depop where they can pick up often better-quality clothes cheaply.

Depop increased revenues by 31% to £71.3m last year, according to accounts filed at Companies House this week, as the number of registered users rose by 5 million to 35 million. The UK-headquartered group, which is now owned by US-based marketplace Etsy, narrowed losses by 28% to £49m. Globally, sellers on its platform raked in $600m in sales last year.

Clive Black, an analyst at Shore Capital, said the figures confirmed that Shein remained “a powerful machine” that presented a “real challenge for Boohoo and Asos”.

Both companies have reported falling sales, and Boohoo recently made a number of cost-cutting measures, including shutting its US warehouse.

Black said Shein’s growth had given rivals “every reason to feel not particularly cheerful”.

He added: “In the entry-price market, where customers don’t care too much about the supply chain, it’s a fundamental and big part of Asos and Boohoo’s problems.”

UK retailers have called on the government to change tax rules, as Shein partly benefits from sending goods directly to shoppers, including to the UK and US, from China so they attract fewer taxes.

The EU is moving forward with plans to impose customs duty on cheap goods in a shift that could hit imports from online retailers such as Shein, potentially harming its hoped-for London listing.

The mooted flotation has come under fire from workers’ rights campaigners who are concerned about a lack of transparency over Shein’s supply chain.

Black said the UK trading figures were part of a much wider global picture for Shein, and the potential listing would be affected by concerns about tax, potential problems in the supply chain, plagiarism and growth.

Founded by the entrepreneur Chris Xu, the company continues to run most of its operations from China but sells all its goods outside the country. The retailer, which is headquartered in Singapore and has 33 UK employees, reached a valuation of $100bn in an April 2022 fundraising round, making it the third-most valuable startup in the world.

A spokesperson for the company said: “Shein has grown revenue and profit over the last year. This has been driven by strong customer demand and loyalty across the UK. We continue to invest in our on-demand platform to provide more choice and better experience for customers.”