Nike Struggles with Sharp Sales Decline in Greater China

Nike (NKE) is facing significant challenges in Greater China, where sales are declining faster than in any other market. Over the past year, the stock has plummeted by about 51%, while the S&P 500 gained 17.1%. The company's fiscal first quarter of 2027, which ended on August 31, 2026, saw a 26% drop in Greater China revenue on a currency-neutral basis, compared to just a 2% growth in North America. Overall, Nike's total revenue fell by 4% to $11.2 billion.

During the fiscal first-quarter 2027 earnings call on October 1, 2026, four out of eight analysts focused on China, highlighting concerns about the region's impact on the company's performance. Management expects revenue to decline in the high single-digit range for fiscal 2027, a stark contrast to the 0.2% growth seen in fiscal 2026. The first quarter's 4% decline suggests that future quarters may see even weaker results.

Nike's management is implementing a marketplace reset in China to reposition the brand as more premium. This effort, along with a digital cleanup of online sales, is expected to take multiple seasons and will likely hurt revenue and profitability in the near term. However, management pointed to positive developments, such as growth in the running business and the launch of a new collection made specifically for China in October. The company plans to provide a clearer view of its long-term growth strategy at its Investor Day in November.

Despite these efforts, management has not provided a specific figure for China's revenue decline, stating that the actions taken will further dampen performance compared to the first quarter. A smaller decline than 26% in the next quarter would indicate that the reset is costing Nike less than anticipated.