Nike’s stock price tumbled over 10 percent on Dec. 19, revealing a significant challenge for the sportswear giant despite overall positive results: weakening sales in China. The company, led by CEO Elliot Hill, is navigating a complex turnaround, and the Chinese market is proving to be a critical test.
Hill, a veteran Nike executive who returned from retirement last year to take the helm, has focused on product innovation and a renewed emphasis on athletic performance. This strategy boosted the company’s second quarter fiscal 2026 results, with total sales reaching $12.4 billion for the September-November period—a 1 percent increase year over year. However, net income decreased by 32 percent to $800 million.
Despite the global gains, sales in China dropped 17 percent to $1.4 billion, marking the sixth consecutive quarter of declining revenue in the region.
“We see China as a big opportunity,” Hill stated during Nike’s earnings call on Dec. 18. “With that said, it’s clear that we need to reset our approach.”
Nike’s recent struggles stem from an over-reliance on lifestyle sneakers. Hill, who previously spent over three decades at Nike before retiring in 2020, was brought back last October to revitalize the company’s focus on specialized sports categories like running, basketball, and football.
Nike’s ‘Win Now’ turnaround plan
Hill’s “Win Now” reorganization streamlines operations and reduces management layers. The core of the strategy is to reassert Nike’s leadership in sports performance by prioritizing products for running, basketball, and football, while scaling back on popular but oversaturated lifestyle staples like the Air Force 1 and Dunk.
This approach is already showing promise, particularly in North America, where sales increased 9 percent in the most recent quarter to $5.6 billion. “I’d say we’re in the middle innings of our comeback,” Hill said.
China, however, presents a significant hurdle. Initiatives to implement “Win Now” in cities like Beijing have faced challenges, including declining foot traffic and a buildup of aging inventory. “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 acknowledged.
Looking ahead, Nike intends to adapt its strategy to China’s increasingly digital retail landscape. Executives emphasized the need to improve the company’s store presence within China’s “monobrand footprint,” where single-brand stores are favored over third-party retailers, as they ramp up investment in the region.
Simultaneously, Nike is contending with the impact of tariffs. Manufacturing in Vietnam, Indonesia, Cambodia, and China, the company is absorbing increased costs and raising prices due to import levies, resulting in a $1.5 billion tariff hit for the year—a “significant headwind,” according to Hill.
