The sportswear giant is experiencing continued setbacks in its second-largest market and has warned that performance in China may deteriorate further next quarter.
A man pushing a stroller stands before a large screen displaying legs wearing Nike socks and shoes. The image shows a Nike store in China, where the company has now recorded seven consecutive quarters of declining sales.
Nike executives forecast that sales in China could drop by up to 20% this quarter, triggering a sharp decline in the company’s stock price.
Elliot Hill, who took over as CEO of Nike 18 months ago, previously stated that repairing the performance of this iconic athletic footwear company would take time. Now, however, he has warned of further challenges in one of its most critical markets.
Following the executives' projection of a potential 20% decline in Nike’s China sales this quarter, the company’s stock fell sharply by 13% on Wednesday morning. Long considered a core growth engine and Nike’s largest market outside North America, China has become a difficult challenge in the company’s turnaround efforts, as it faces increasingly intense competition from local rivals.
“This will take time, but we remain convinced that serving 1.4 billion potential sports consumers in China represents one of the most promising opportunities in the athletic industry,” Hill told investors during the company’s earnings release on Tuesday. The Nike veteran, who returned to lead the company in October 2024, has referred to the Chinese market as the “longest and toughest battle” in Nike’s return to growth.
Nike has now seen seven straight quarters of declining sales in China, and the results for the quarter ending May 31 could be even worse. Chief Financial Officer Matt Friend projected that sales in China would fall by 20%, and that the region would remain a weak spot throughout the next full fiscal year.
The sportswear company is facing intensified competition from rising local brands such as Anta Sports, which reported a 13% sales increase in 2025, reaching approximately $11.6 billion. Competitors like Anta and Li-Ning offer similar athletic shoe styles at significantly lower prices—an advantage over higher-priced foreign brands amid China’s economic slowdown. Their extensive retail networks across the country also help them capture market share.
However, other foreign sportswear brands have not experienced sales declines in China as severe as Nike’s. Brands such as On Running and Hoka have continued to grow, benefiting from China’s running boom. Meanwhile, Adidas has reversed its previous sales decline in China by accelerating product refresh cycles and introducing more locally designed sportswear.
Inventory management is another issue for Nike in China. Friend stated on Tuesday that the company is reducing shipments to the Chinese market to avoid having to discount products, while also working to clear existing inventory in the region.
“We are building the foundation for more balanced growth in China in the future, which will lead to a healthier and more profitable business,” Friend said.
Additionally, while Nike’s running product sales have grown in China, its sportswear apparel line has underperformed. Recently, the company has experimented with adjusting product mixes and marketing narratives in select stores, reporting that these changes have increased store traffic. Friend said Nike has expanded this strategy to an additional 100 stores in China.
Nike’s recovery is progressing more smoothly in other regions. Sales in North America, Europe, and Latin America have seen modest increases, with total quarterly revenue reaching $11.3 billion, exceeding Wall Street expectations. However, as renewed conflict in the Middle East drives up shipping costs and could further increase consumer goods prices, reversing the downturn in China has become even more crucial.
Reflecting on the ongoing transformation, Hill said, “This work is complex and difficult, and some aspects are taking longer than I had anticipated.”
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