Nike, the world's largest sports brand, saw its stock price plunge as it grapples with a sluggish China market and mounting inventory problems.
On Tuesday, Nike projected fourth-quarter revenue for fiscal year 2026 (March–May) would decline 2 to 4 percent year-on-year during its earnings conference call, Bloomberg reported. The guidance fell far short of Wall Street's consensus estimate of a 1.9 percent increase. Nike shares dropped more than 9 percent in after-hours trading.
China was the hardest hit. Sales in the country were expected to fall approximately 20 percent during the same period. "We are intentionally pulling back sales in China to reduce our inventory burden," Nike Chief Financial Officer Matthew Friend said. He added that external variables including instability in the Middle East and rising oil prices were also clouding the earnings outlook.
Greater China is Nike's third-largest market after North America and Europe, Middle East and Africa (EMEA), accounting for 15 percent of annual revenue, according to Reuters. However, the company has been losing market share to local Chinese brands such as Anta Sports and Li Ning over the past several quarters as its product competitiveness has weakened.
Nike appointed Elliott Hill as its new chief executive officer in 2024 and launched efforts to revamp products and restructure operations, but analysts say the initiatives have yet to produce visible results.
The global downturn has not spared South Korea either. Nike Korea posted revenue of 1.8913 trillion won and operating profit of 37.8 billion won for fiscal year 2024 (June 2024–May 2025), down 5.7 percent and 4.2 percent year-on-year respectively, according to its latest audit report.
Just two years after becoming the first single sports brand in South Korea to surpass 2 trillion won in annual revenue in fiscal year 2022, the company has retreated to the 1 trillion won range. The decline marks a second consecutive year of falling sales, following the first-ever revenue contraction recorded in fiscal year 2023 since the company began publishing audit reports.
Industry observers point to the absence of hit products and a shrinking market presence caused by Nike's push toward direct-to-consumer (DTC) sales, which led to reduced transactions with major multi-brand retailers. Inventory assets at the three largest vendors — Daeyeon, Eungwang, and WinWin Sports — also swelled 11.2 percent year-on-year.
While Nike stumbled, Adidas elevated South Korea to a standalone market and strengthened its localization strategy, boosting combined sales in South Korea and Japan by 3.6 percent year-on-year. New Balance also crossed the 1 trillion won mark in domestic revenue last year. Industry analysts say Nike's core problem was its failure to respond in time to shifting trends in the South Korean sports market, which has been moving toward running shoes and trail footwear.