Nike’s sales in the Chinese market have been on a continuous decline for the sixth consecutive quarter, turning what was once seen as a growth engine into the biggest pressure point for the American sportswear giant.
In the second quarter, Nike’s footwear sales in China dropped by 21%, with the Chinese market accounting for around 15% of Nike’s annual revenue.
Nike’s CEO Elliott Hill stated during a financial conference call on Thursday, December 18, “Clearly, we need to readjust our strategy in the Chinese market.”
Nike’s struggles in China have been ongoing, and investors are not expecting a rapid recovery in growth. The proactive measures implemented by Hill, such as significant push for product innovation and cutting back on traditional lifestyle collections, have not shown improvement. The slow and steady recovery goal that investors anticipated has not been met.
Financial reports reveal that Nike’s profit margin is further accelerating its decline. Due to tariff costs and inventory backlogs, the gross profit margin in the second quarter decreased by approximately 300 basis points.
Nike’s stock price dropped by 11% to $58.71 on Friday, December 19, marking a new low in seven months. The stock has already fallen by 22% this year, possibly setting a record for the fourth consecutive year of decline.
In the highly competitive Chinese consumer market, where consumer fatigue intensifies and prices continue to decline, Nike faces structural challenges.
Hill admitted that Nike’s investment in renovating stores in China to increase foot traffic has been insufficient. Additionally, the “single-brand retail” model limits the advantages of multi-channel sales similar to those in the United States. Single-brand retail refers to brands typically operating stores themselves rather than selling through third-party retailers.
At the same time, Nike is experiencing weak online sales in China. Due to increasingly fierce competition from local brands such as Anta and Li-Ning, Nike’s online sales have dropped by 36%.
During the conference call on Thursday, when an analyst inquired about the timeline for the recovery of the Chinese market, Nike’s top executives did not provide a direct answer.
Hill stated, “We firmly believe that our growth will come from the sports field, but the reality is that we have transformed into a lifestyle brand, whereas in the Chinese market, price prevails.”