Nike rebound faces pressure from China slump and internal missteps

Nike’s latest quarterly report showed limited progress in North America while underscoring the scale of the turnaround facing CEO Elliott Hill, Fortune reported. The company’s recovery matters because Hill is trying to repair a global sportswear business whose shares have fallen sharply from their peak and whose rivals have gained ground in key categories.

According to Fortune, Nike said Tuesday that North American revenue rose 3%, helped by footwear sales and improved ties with wholesale partners the company had previously pulled back from. Hill has been working to restore those relationships after earlier management emphasized direct sales and reduced reliance on retailers such as Foot Locker, Fortune reported.

The gains were offset by weaker results elsewhere. Fortune reported that sales in China fell 12% from a year earlier, Converse revenue continued to decline, and Nike has lost share in running shoes to competitors including On and Hoka.

Nike finance chief Matthew Friend told analysts that consumers are under strain worldwide, according to Fortune. The company also issued a cautious outlook for the current quarter, citing a difficult economic backdrop.

Analysts cited by Fortune said some of Nike’s problems stem from company choices as well as consumer weakness. Fortune pointed to several recent missteps, including an April Boston Marathon marketing campaign that appeared to ridicule slower runners and a World Cup merchandise shortfall that left many U.S. stores without enough Nike gear.

The company also drew scrutiny for reducing some financial disclosures in its latest earnings materials, including a sales breakdown by gender, Fortune reported. Laurent Vasilescu, senior analyst at BNP Paribas Equity Research, wrote Wednesday that the pullback was a warning sign because Nike had identified women’s products as a long-term growth area.

The disclosure change could sharpen concern over Nike’s efforts to expand with women shoppers, Fortune reported. The company has historically had a customer base that leans male and has spent years trying to grow that part of the business.

Nike’s stock fell after the earnings report, according to Fortune. The shares are down 75% from their all-time high five years ago and have lost about half their value since Hill became CEO in 2024, Fortune reported.

Neil Saunders, managing director at GlobalData, wrote in a research note cited by Fortune that Nike’s troubles appear more entrenched than previously recognized, making the turnaround slower than expected. Hill also acknowledged frustration with the pace of repair in an April message to employees, saying he was tired of talking about fixing the business and wanted to focus on growth and motivation, Fortune reported.

Hill returned from retirement in 2024 to lead Nike after a long career at the company, Fortune reported. His plan includes restoring wholesale relationships, putting more focus on sports performance products, renewing product innovation and broadening Nike’s appeal across sports and customer groups.

China remains one of the largest challenges. Fortune reported that local brands have been attracting consumers there, contributing to Nike’s sales decline and unsold inventory that could pressure margins for an extended period.

Hill said Nike must tailor its China offering to local preferences and move at the pace of Chinese consumers, according to Fortune. On Tuesday, he described the turnaround as a matter of consistent execution across the company’s portfolio and said Nike has to prove progress every season.

This story draws on original reporting from Fortune.