Nike Downgraded by S&P Amid China Sales Slump and Cash Flow Concerns

On October 5, 2026, S&P Global Ratings downgraded Nike (NYSE:NKE) from A+ to A, assigning a negative outlook. The agency cited a prolonged turnaround, significant declines in cash flow, and a 26% drop in Greater China sales during the first fiscal quarter of 2027. S&P expects Nike’s consolidated revenue to fall more than 7% in fiscal 2027 and anticipates a cash burn of approximately USD 1.2 billion annually for the next two to three years. The downgrade follows a previous cut in July 2025, marking the second reduction in fifteen months.

The rating action reflects concerns over Nike’s financial stability, with leverage projected to rise to 1.4 times by fiscal 2028. Despite holding USD 8.4 billion in cash and short-term investments, the company faces challenges, including restructuring costs and potential leadership changes that could further delay recovery. S&P’s negative outlook signals the possibility of another downgrade within the next 12 to 24 months if Nike fails to stabilize its financial performance.

Nike’s stock reaction to the downgrade was inconsistent, with reports indicating declines ranging from 0.35% to 2.88%. The company had already experienced a drop after its October 1 earnings report, which included weak guidance for fiscal 2027, projecting revenue to decline at a high-single-digit rate. Management, however, has stated its intention to maintain and grow the dividend payout, having paid approximately USD 610 million in the previous quarter.

Investors will be watching for further developments, including potential rating actions from other agencies, Nike’s second-quarter report, and the impact of higher yields on refinancing costs. The company’s liquidity of USD 11.4 billion provides a buffer, but any additional delays in recovery could lead to further credit rating cuts.