A rumor concerning Nike's adjustment of its online distribution system has placed TOPSPORTS (ASX: 06110) under intense scrutiny.
On June 25th, the company issued an announcement to clarify that it has not received any formal notification from Nike regarding the termination of their online distribution arrangement in mainland China.
Previously, influenced by the related rumors, the share price of TOPSPORTS had fallen for seven consecutive trading sessions, with a cumulative decline nearing 27%. On June 24th, the stock plunged as much as 14.6% intraday, hitting a recent low, prompting a trading halt and an urgent company response.
The full version of the market rumor suggests that Nike plans to cancel first-tier online distributor authorizations in mainland China effective January 1, 2027. If implemented, distributors would lose the right to sell Nike products on any online platform, and consumer online purchase channels for Nike goods would be limited solely to Nike's official flagship stores.
For TOPSPORTS, the reason this rumor triggered such a swift market reaction lies in the fact that Nike remains one of its most crucial brand partners.
As a leading player in China's sportswear and footwear retail channels, TOPSPORTS has long handled the retail operations and channel distribution for international sportswear brands like Nike and Adidas in the Chinese market. Any significant change to Nike's online distribution rights would impact not just a single sales channel, but the very boundaries of cooperation between TOPSPORTS and its core brand.
In its announcement, TOPSPORTS also disclosed that for the fiscal year ending February 28, 2026, revenue from online sales of Nike products accounted for approximately 22% of the group's total revenue.
Adding to the sensitivity, the rumor gained traction just as the 618 shopping festival was concluding. In recent years, the pricing structure for sportswear on online platforms has been under sustained pressure, with discounts, promotions, platform subsidies, and distributor deals collectively driving down prices for some branded goods.
For international sportswear brands like Nike, which rely on brand premium and price discipline, the question of how to reorganize online channels and stabilize the pricing system has long been a market concern.
In its statement, TOPSPORTS also mentioned that Nike and the group have been in ongoing discussions about various aspects of their business cooperation, including the status of online sales arrangements.
Communication between the two parties regarding channel structure is perhaps not a new development. Therefore, even though TOPSPORTS has clarified it has not received formal notice, the market may still view this as a potential signal of possible channel adjustments by Nike.
TOPSPORTS itself is navigating a challenging period. The company's disclosed operational data for the first quarter of the 2026/2027 fiscal year, ending May 31, 2026, showed a low double-digit percentage decline of 10% to 20% in the total gross merchandise value (GMV) for its retail and wholesale businesses. The gross sales area of directly operated stores also decreased by approximately 2.9% compared to the end of the previous quarter.
Offline store networks are continuing to contract and adjust, with limited strength in the recovery of end-consumer spending. In contrast, online channels have shown more resilience, with sales still maintaining double-digit growth.
From a broader industry perspective, Nike's growth momentum in the Chinese market remains insufficient.
If Nike were to further strengthen its official direct-to-consumer and flagship store systems, it would essentially be seeking greater direct control over its pricing system, membership assets, and user data.
However, for distributors like TOPSPORTS, a tightening of brand channels implies that their role in the industry chain requires redefinition, and they must find new leverage points in operational capabilities, channel efficiency, and service value in the future.
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