Nike Sinks After China Sales Plunge, Delaying Turnaround

Core Viewpoint - Nike Inc. is experiencing a decline in sales, particularly in China and its Converse brand, leading to a forecast of low-single digit revenue decrease for the upcoming quarter after two periods of growth [1]. Group 1: Sales Performance - Converse sales dropped by 30% in the latest quarter, while sales in Greater China fell by 17% [2]. - Nike's stock fell as much as 11% in a single day, marking the largest intraday decline since April [2]. - The stock has decreased by 13% year-to-date and is on track for its fourth consecutive annual decline [3]. Group 2: Market Challenges - The company is facing significant challenges in China, where it has reported declining store traffic and difficulties in selling older inventory [4]. - The Chinese market has shifted to being discount-driven due to an economic slowdown, property crisis, and job market uncertainties, impacting consumer spending [6]. - Nike is struggling to deliver standout products that resonate with sophisticated Chinese consumers who prioritize experiences and niche performance features [6]. Group 3: Strategic Focus - CEO Elliott Hill indicated that Nike's recovery will not be linear, emphasizing the need for decisive action to address lagging areas, particularly in China [4]. - The company is concentrating its efforts on major cities like Beijing and Shanghai while refining its product assortment to better meet market demands [4]. - Analysts have noted that while progress is being made, the recovery in China is taking longer than anticipated, leading to price target cuts for Nike's stock [3].