Nike’s struggle to revive sales in China is becoming one of the biggest obstacles to the sportswear giant’s turnaround, with investors increasingly questioning whether the company can restore growth in one of its most important international markets.
Nike shares have suffered a dramatic decline in recent years. By early September 2026, the stock was trading around US$38, down more than 40 per cent since the beginning of the year and roughly 76 per cent below its November 2021 record high. The company is now set to leave the S&P 100 index, highlighting the scale of the deterioration in its market value.
China is a major reason for investor concern.
Nike’s Greater China revenue fell 11 per cent for fiscal 2026, to approximately US$5.8 billion. In the fourth quarter alone, revenue declined 12 per cent to about US$1.3 billion. China represents roughly 15 per cent of Nike’s global annual revenue, making the region too large for investors to ignore.
The problem is also persistent rather than a single bad quarter. In March, Nike reported that Greater China sales had fallen 10 per cent, following a 16 per cent decline in the previous quarter. Management warned that the subsequent quarter could see an even steeper 20 per cent decline as the company worked through excess inventory.
That pattern has changed the way investors view Nike’s turnaround.
When CEO Elliott Hill took over in late 2024, expectations were that a combination of better products, stronger relationships with retailers and renewed emphasis on performance footwear would restore Nike’s growth. North America has provided encouraging evidence that the strategy can work. Nike’s North American revenue increased 5 per cent during fiscal 2026.
China revenue down
One of the biggest challenges is intensifying domestic competition. Chinese brands including Anta and Li-Ning have become considerably stronger, offering sophisticated running and lifestyle products at competitive prices. Analysts say Chinese consumers have become less dependent on Western brands, while the “guochao” or national-trend movement has increased interest in locally developed brands.
The competitive threat is no longer confined to cheaper footwear. Chinese companies are increasingly competing with Nike in premium running shoes and technical sportswear. At the same time, international competitors such as Adidas, Hoka, On and Salomon are fighting for the same consumer. The result is a far more fragmented Chinese sportswear market than the one Nike dominated a decade ago.
Nike is also trying to clean up its distribution network and excess inventory. The company has been reducing sales through some channels while attempting to improve the quality of its retail presence. That strategy may ultimately strengthen the brand, but it creates additional short-term pressure on revenue.
Future earnings not bright
This is particularly important for the share price because investors are looking beyond today’s earnings. They want evidence that Nike can return to sustainable growth.
Morgan Stanley’s latest assessment illustrates the problem. On September 10, the investment bank initiated coverage with an Underweight rating and a US$31 price target, well below the broader analyst consensus of about US$48. Morgan Stanley argued that current expectations assume too much growth too soon, particularly in China, while competition and macroeconomic pressures remain significant. Nike shares subsequently fell almost 2 per cent to below US$37, a roughly 12-year low.
The China problem therefore extends beyond lost sales. It is undermining confidence in Nike’s entire turnaround timetable.
There are reasons for optimism. Nike says it is seeing improvements in running and performance products, while North America is demonstrating that the brand can still generate growth. The company’s global wholesale business also improved, with full-year wholesale revenue rising 4 per cent on a currency-neutral basis.
But until China stabilises, investors are likely to remain cautious.
The key test will come with Nike’s next earnings report and its November investor day. The market will be looking for evidence that the decline in China is approaching a bottom and that Nike can regain relevance with younger Chinese consumers.
For shareholders, the question is no longer simply whether Nike can sell more shoes. It is whether the world’s most famous sportswear brand can win back a Chinese consumer who has increasingly discovered that there are credible local alternatives.
Until Nike can answer that question, China’s weakness is likely to remain a major weight on the company’s share price.
