Nike recovery update: still big trouble in China
The world’s top sportswear brand reported fourth-quarter earnings this week, and the struggles continue. Full-year revenue was flat, while profits jumped — but only due to a near $1bn tariff refund.
While North America is growing, Nike’s business in China — its second biggest market — continues to shrink at a rapid clip. Sales there in Q4 dropped 17 per cent year-on-year.
The company, under CEO Elliott Hill, is seeking to revamp its strategy in China. It is trimming the range of products it offers to online retailers and where those products are sold after being caught in a discounting doom loop that hammered margins at bricks-and-mortar stores. It wants to make more products designed specifically for a Chinese consumer too.
But cheaper, more nimble Chinese brands are on the front foot — and not just in their home market. Last month Li-Ning announced a 10-year deal, reportedly worth $400mn, with four-time NBA champion Stephen Curry. Meanwhile Anta opened its first US flagship store in Beverly Hills earlier this year, one block over from Rodeo Drive.
The market reaction to the results was positive. Shares are up more than 7 per cent this week. But that will be little comfort to investors. The stock is still down by a third in the past 12 months.