When he took Nike’s helm 18 months ago, Chief Executive Elliott Hill said it would take time to rehab the iconic sneaker maker. Now he is warning of another setback in one of its most critical markets.
Shares of Nike tumbled 14% Wednesday morning after executives predicted sales would drop in the current quarter by as much as 20% in China. Long a key growth driver—and Nike’s biggest market outside North America—China has become a thorn in its turnaround efforts as Nike faces fiercer local competition and cooling consumer demand.
“It will take time, but we remain confident that serving 1.4 billion potential athletes in China is one of the most powerful opportunities in sport.” Hill told investors late Tuesday as the company reported earnings. The CEO, a Nike veteran who came out of retirement to take the top job in October 2024, has called China “the longest road ahead” in the company’s efforts to revive growth.
Nike has now experienced sales declines in China for seven straight quarters, and the current one, ending May 31, could be even worse. Nike’s finance chief, Matt Friend, predicted sales there would fall 20% and would continue to be a weak point for the company throughout the next fiscal year.
The sneaker company is facing stiffer competition from domestic upstart brands like Anta, whose own sales jumped 13% in 2025 to about $11.6 billion. Anta and rival brands like Li Ning offer similar athletic footwear for a significantly reduced price—an advantage vis-à-vis more premium-priced foreign brands as China endures an economic slowdown. Their sprawling Chinese retail networks have also given them a market-share edge.
Still, other foreign sports brands haven’t suffered as big a sales blow in China as Nike has. Brands like On and Hoka have continued to grow by capitalizing on China’s running boom. Meanwhile, Adidas has reversed earlier sales declines in China by speeding up product cycles and introducing more locally designed sportswear.
Managing its inventory in China has been one issue for Nike. Friend said Tuesday that the company was shipping fewer products to China so they wouldn’t end up selling at a discount. Meanwhile, the company is trying to reduce the inventory that it already has there.
“It’s going to be a healthier, more profitable business as we set that foundation for much more balanced growth as we go forward in China,” Friend said.
And though sales of its running products are growing in China, its sportswear lines have taken a hit. More recently, the company has been experimenting with different product assortments and storytelling in some stores, and said it has seen improved traffic as a result. Friend said Nike had expanded the strategy to 100 more stores across China.
Nike’s comeback efforts are making more progress elsewhere. Its sales ticked up in North America as well as in Europe, Latin America and elsewhere, and overall, its quarterly sales of $11.3 billion beat Wall Street expectations. But fixing China becomes more paramount as a new conflict in the Middle East drives up shipping costs and could push consumer prices higher.
“This is complex work, and parts of it are taking longer than I’d like,” Hill said of the turnaround.
Write to Inti Pacheco at inti.pacheco@wsj.com