Nike's China Reset May Cost Billions in Sales

Nike's recent decision to simplify its online marketplace in China as part of its 'Win Now' strategy may lead to significant revenue losses for the company. Analyst Matthew Boss warns that Nike could face a $1B headwind in sales by 2028 due to the policy change, which will see the termination of online sales at Topsports and Pou Sheng.

The move is part of Nike's 'Win Now' strategy, introduced in 2024 by CEO Elliott Hill. JPMorgan cut its earnings estimates for Nike by 20% below consensus for the second half of 2027 and 2028, citing the financial impact of this decision.

However, not all analysts are bearish on the company's prospects in China. Morningstar analyst David Swartz believes that the new policy may benefit partner retailers in the country if Nike regains its sales momentum, margins, and brand health in the long run. The firm thinks Nike will return to sales growth and a typical EBIT margin of 31% by fiscal 2028.

Nike's shares have been underperforming the S&P 500 this year, falling 33% so far and 43% over the past 12 months. The stock has also seen significant investor attention following JPMorgan's downgrade to 'Underweight' from 'Neutral', with more than 3% wiped off its value in premarket trade.