NIKE's China Recovery Stalls: Can It Regain Its Edge in Asia?
NIKE, Inc. NKE boasts a solid presence in China, which forms a cornerstone in its global growth strategy. The company has strategically invested in China to reinforce its consumer engagement and gain competitive leverage. NIKE's China business, which is commonly referred to as Greater China, delivered revenues of $1.7 billion in third-quarter fiscal 2025, contributing about 15% to total revenues.
However, Greater China has remained a challenging market for NIKE, weighed down by a difficult operating environment and tariff-related headwinds. In third-quarter fiscal 2025, Greater China revenues plunged 17% on a reported basis (down 15% in constant currency), as NIKE Direct sales fell 11%, NIKE Digital revenues slid 20% and NIKE-owned store revenues dipped 6%. Wholesale performance also weakened, with an 18% year-over-year decline, underscoring persistent consumer and trade pressures across the region.
Despite near-term challenges, NIKE remains bullish on Greater China's long-term growth potential. To reignite momentum, the company has aggressively cleaned up the marketplace—executing returns and rebates, liquidating excess inventory, and creating space for new product drops and expanded assortments. Management acknowledges China's status as a 'mono-brand market,' and is committed to patience and precision as it phases in its Win Now initiatives, expecting these actions to boost foot traffic and market share over time.
NKE deepens its vast presence in China by customizing product innovation to local tastes, launching culturally resonant marketing campaigns, accelerating research and development activities, and forming strategic alliances with leading Chinese sports and cultural organizations. This concerted effort to embed sport and fitness into everyday life not only deepens consumer engagement but also positions NIKE to outpace competitors in its broader Asian markets.
NKE's Competition in Asia
lululemon athletica inc. LULU and adidas AG ADDYY are the key companies competing with NIKE in China.
Like NKE, lululemon seeks to enhance its presence in China, which is among its key global markets. The company has been experiencing solid momentum in its international markets, especially in China. In first-quarter fiscal 2025, revenues increased 21% in Mainland China (22% in constant currency) while comps improved 8%. The company looks forward to strengthening its physical appearance with constant store openings in the international markets, primarily in China. Amid the tariff-driven pressures, lululemon anticipates revenue growth of 25-30% in Mainland China in fiscal 2025, thanks to its distinct product and innovative solutions. Growth in LULU's customer base through its stores and diverse e-commerce platforms, coupled with product innovations and a robust omnichannel operating model, has been bolstering growth in the region.
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. Such strategies are likely to offer resilience and sustainability in the long term.
NKE's Price Performance, Valuation and Estimates
Shares of NIKE have lost around 15.5% year to date compared with the industry 's decline of 14%.
From a valuation standpoint, NKE trades at a forward price-to-earnings ratio of 32.5X, higher than the industry's average of 25.76X.
The Zacks Consensus Estimate for NKE's fiscal 2025 and 2026 earnings implies a year-over-year plunge of 46.1% and 8.7%, respectively. The company's EPS estimate for fiscal 2025 and fiscal 2026 has been stable in the past 30 days.
NIKE stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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