Nike Sales Expected to Drop 1% as China Demand Falls 9%: Dec 18 Report

Nike faces a testing earnings day on Thursday, with analysts predicting second-quarter sales of around $12.2 billion, a decline of 1% compared to last year. The biggest challenge is expected to come from Greater China, where revenue could fall 9% to approximately $1.6 billion. The stock has already fallen by 8% this year, as investors anticipate more disappointing news.

Analysts attribute these declines to a combination of increased discounting and intensified competition. Estimates from Visible Alpha, part of S&P Global Market Intelligence, suggest Nike has been offering more promotions and clearing old stock at a rapid rate—moves that are squeezing profit margins. Meanwhile, emerging brands such as On and Hoka are gaining ground, further challenging Nike's dominance in the footwear sector.

In its recent note, Visible Alpha highlighted that revenue and profit are expected to remain under pressure due to ongoing promotional activity, inventory adjustments, and rising competition from fast-growing brands like On and Hoka. These factors are making it more difficult for Nike to stabilise its sales.

China Slump Deepens as Rivals Gain Ground

China's consumers are still spending more overall—retail sales of consumer goods increased by 4.3% in the first ten months of 2025 to over 40 trillion yuan—yet Nike's sales in the region are shrinking. Analysts forecast that Nike's Greater China revenue will decline by 9% to around $1.6 billion in the current quarter. This follows last year's second quarter, when Nike reported Greater China sales of $1.7 billion, already down 11% after adjusting for currency fluctuations.

Beijing remains optimistic that domestic consumer spending will continue to drive the recovery, with a CGTN report on China's key year-end economic meeting highlighting that everyday spending made up 53.5% of the country's growth in the first three quarters of 2025. Despite this, Nike's sales decline indicates that the Chinese market is becoming more competitive, especially as rivals like On and Hoka expand their presence in the performance and running shoe markets. For analysts, Nike's slowdown in China acts as a warning rather than a mere macroeconomic fluctuation.

Footwear Slide Offsets Wholesale Strength

Nike's core footwear business is forecast to shrink by 2% to approximately $7.5 billion, despite some smaller lines experiencing growth. Analysts using Visible Alpha data suggest apparel revenue could increase slightly by 1% to $3.8 billion, and equipment sales might rise 2% to around $555 million. However, Nike's smaller sneaker brand Converse is expected to see an 18% decline to approximately $350 million.

Regional performance tells a similarly mixed story. North America is projected to generate about $5.2 billion, remaining flat compared to last year. Conversely, the EMEA region is expected to grow 3% to $3.4 billion. Meanwhile, sales in Asia Pacific and Latin America are forecast to decrease by 1% to $1.7 billion, leaving outside-China growth marginal.

Consumer access to Nike is also shifting. Wholesale revenue—sales through third-party retailers—is expected to increase by 3% to $7.1 billion. Meanwhile, direct-to-consumer sales via Nike's own stores and website are predicted to fall 5% to $4.8 billion, although stronger online demand later in the year could help stabilise this segment.

Rising Competition and Nike's Turnaround Strategy

The rise of emerging rivals is adding pressure as Nike tries to stabilise its business. Visible Alpha highlights that the company is under strain from ongoing promotional activity, inventory adjustments, and increased competition from brands like On and Hoka. This intensifying rivalry is forcing Nike to rely more heavily on discounts, which can reduce profit margins even if sales remain steady.

Nike's President and CEO, Elliott Hill, is betting on a strategic turnaround rooted in revitalising the brand's focus on sport. In the company's fiscal second quarter results, he stated that 'our clear priority is to return sport to the centre of everything we do' and emphasised that Nike is 'taking immediate action to reposition our business, so we can get back to driving long-term shareholder value.'

The upcoming earnings report will be crucial to see whether Nike's decline is beginning to slow or if it's just pausing. Last year's second quarter saw Nike report revenue of $12.4 billion, down 8%, and this year's forecast indicates a smaller decline of 1%. Despite the challenges, analysts see potential in digital growth, which could support a rebound later in the year, even as Nike continues to lean on wholesale channels.

Thursday's results will reveal whether Nike's recent difficulties are stabilising or if the company faces a longer road to recovery. The key question is whether its 'back to sport' strategy and increased online focus can help regain ground against rivals like On and Hoka.