Finding a renewed approach to regaining its footing in China is a top priority for Nike as its second quarter earnings report released on Thursday revealed its sixth straight quarterly decline in sales in the region despite beating Wall Street analysts estimates.
Overall sales climbed 1 percent in its second quarter, which ended on November 30, the company has been dogged by weaker performance in China, Taiwan and Hong Kong — down 17 percent — as competition from Anta and Li Ning in the region surges.
“Nike is in the middle innings of our comeback, Elliott Hill said in the report. “We are making progress in the areas we prioritized first and remain confident in the actions we’re taking to drive the long-term growth and profitability of our brands.
Hill, who returned to the company last year from retirement, has been vocal — and visible — in a push to stimulate sales and revive shares that have fallen for a fourth consecutive year.
In early December, the company announced reshuffling in its executive ranks, with the creation of a new chief operating officer role while cutting the chief technology officer and chief commercial officer positions. Nike will also move its direct-to-consumer duties over to its finance boss.
As part of the “Win Now” initiative, Hill believes that that executive changes and reducing layers of management were necessary while also naming the senior leaders of its four focused geographic regions: North America, Europe, Asia Pacific and Latin America.
The moves reflect an active work in progress at Nike with its stock down 13 percent this year with share prices closing at $58.71 on Friday — the lowest in over seven months.
“We are making the shifts required to position our portfolio for a full recovery and driving real-time decisions in service of the long-term health of our brands,” executive vice president and chief financial officer Matthew Friend said in the earnings report.
The figures in Thursday’s earnings report show a sales surge driven by a 9 percent boost in North America over the same period last quarter, while other regions have underperformed. Net income dropped 32 percent to $792 million from $1.16 billion at the same point in 2024.
Still, a resurge in China for Nike is a necessity and Hill was clear with analysts that the company’s strategy for China is in its developing stages.
“What we’ve done is a start, but it’s not happening at the level or the pace we need to drive wider change,” Hill said.
With steep discounting in the lifestyle and sportswear segments in China and increased pressure from existing rivals like Adidas — and domestic brands like Li Ning — the task of capturing consumers does not solely rest on Nike. Despite a variety of options, the Chinese market has been mindful of spending in a slowing economy with tepid decisions at retail.
Meanwhile overall footwear sales were even over the same period at $7.7 billion in the second quarter, apparel was up 4 percent at 3.9 billion, while equipment rose $1 percent to 550 million.
