Will China's Structural Challenges Slow NIKE's Global Comeback?

NIKE, Inc.’s NKE Greater China market has long been a cornerstone of its global growth strategy, delivering outsized revenue expansion and margin accretion in historical years. The region has benefited from a rapidly expanding middle class, growing sports participation, a massive consumer market and strong brand affinity, enabling NKE to scale efficiently across the wholesale and direct-to-consumer channels.

However, NIKE’s Greater China market has been complex in recent years. Macroeconomic headwinds, including weak consumer spending and a highly cautious discretionary landscape, have pressured demand for a while. Also, intensified competition from local brands like Anta and Li-Ning has been acting as a deterrent. This has been leading to significant sales declines despite efforts to revamp its Sport Offense concept in the market. Digital also remains a highly promotional marketplace in the region, with consumer shopping moments reaching longer periods on local platforms with deeper discounting.

In second-quarter fiscal 2026, revenues in Greater China plunged 17% year over year on a reported basis and 16% on a currency-neutral basis to $1.42 billion. NIKE Direct fell 18%. NIKE Digital revenues dropped 36% year over year and NIKE stores decreased 5%. Wholesale revenues for the region tumbled 15% year over year. While challenges persist in Greater China, the company is executing the Win Now actions across major cities, particularly Beijing and Shanghai, with a focus on enhanced storytelling around product innovation, disciplined assortment curation and elevated in-store presentation.
 
NIKE is further evolving its approach to better align with China’s unique mono-brand retail footprint and digital-first marketplace. This reset needs a new way of thinking from its teammates and store partners, hence taking time to fully implement and scale. As China remains one of the most compelling long-term growth opportunities in global sports, the company is fully focused on driving a sustainable recovery. However, this process will unfold gradually as part of NIKE’s broader global comeback.

NKE’s Competition in China

adidas AG ADDYY and lululemon athletica inc. LULU are the key companies competing with NIKE in China.

adidas is another sporting goods giant vying for a larger share of the Chinese market. The company is aggressively focused on expanding its presence in China by launching locally relevant product lines and enhancing its brand equity via collaborations and marketing campaigns. Amid a highly evolving geopolitical and macroeconomic environment, adidas has been diversifying its supply chain and adopting mitigating strategies. Initiatives like the “Future City Concept” stores highlight adidas’ ongoing commitment to forward retail strategy.

lululemon is experiencing rapid growth in China, which serves as a cornerstone of its international expansion strategy. LULU is experiencing strong business momentum in its international markets, including Mainland China and the Rest of the World, as the brand connects well with customers globally. In the International segment, revenues rose 47% in Mainland China in constant currency in third-quarter fiscal 2025, with comparable sales improving 25% in constant currency. Mainland China has consistently been lululemon’s fastest-growing region, often delivering strong revenue growth even amid broader macro volatility.

NKE’S Price Performance, Valuation and Estimates

Shares of NIKE have lost 15.6% in the past six months compared with the industry’s decline of 13.8%.

From a valuation standpoint, NKE trades at a forward price-to-earnings ratio of 30.91X compared with the industry’s average of 27.65X.

The Zacks Consensus Estimate for NKE’s fiscal 2026 earnings implies a year-over-year plunge of 27.8%, while that of fiscal 2027 shows growth of 55.7%. The company’s EPS estimate for fiscal 2026 and fiscal 2027 has moved northward in the past 30 days.

NIKE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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