Nike sees slow recovery as China sales stay weak

Nike's turnaround efforts remain on track but are expected to take longer than investors anticipated, sending the sportswear giant's shares nearly 4% lower in premarket trading on Wednesday despite stronger-than-expected fourth-quarter revenue.

The company reported fourth-quarter revenue of $10.97 billion, down 4% from a year earlier, while sales in Greater China fell 17%. Nike also projected a low-to-mid-single-digit decline in revenue during the first half of fiscal 2027, highlighting continued pressure in one of its most important markets.

Since taking over, CEO Elliott Hill has focused on revitalizing the business through product innovation, a stronger emphasis on sports, and renewed wholesale partnerships. The company plans to launch more than a dozen new footwear styles, although Hill said it will take time for these initiatives to translate into sustained growth.

Finance chief Matthew Friend said China will remain a challenging market as Nike works with retail partners to reduce excess inventory. Greater China contributes around 15% of the company's annual revenue and is its third-largest market.

Analysts said the company's recovery is progressing, albeit gradually. Telsey Advisory Group noted that sales remain weak across sportswear and several international markets, with a broader rebound unlikely before fiscal 2028. Morningstar added that Nike's "Win Now" strategy has improved inventory management and reduced costs, but has yet to produce a significant improvement in operating performance.

However, there were signs of progress. China sales declined less than the company had previously forecast, while stronger World Cup-related marketing, an accelerated product pipeline, improving soccer demand, and a projected expansion in first-quarter gross margin indicate that the business is beginning to stabilize.

Nike shares have fallen about 35% this year as the company continues to face intense competition from rivals including Anta, Li Ning and Hoka.