As Nike writes a comeback story, fixing its operations in China will be a crucial chapter on its path back to full strength for its overall business and its stock price. The legendary brand has struggled globally to rebound from a failed post-pandemic direct-to-consumer strategy under former CEO John Donahoe, who was ousted last year. Elliott Hill, a former longtime Nike executive, replaced Donahoe and started as CEO in mid-October 2024. The 61-year-old Hill was brought in to turn things around. He started at Nike as an intern in 1988 and rose through the ranks to president of consumer and marketplace before his brief retirement in 2020. Since his return, Hill has centered his plans to revive Nike around the love of sport in the U.S. and globally. It’s not going to be easy. Nike shares have been in the doghouse since their record high close of $177.51 each in early November 2021. Turnarounds don’t happen overnight. By his own admission, Hill told CNBC in an interview that aired Monday that it will “take a while.” Speaking to CNBC’s Sara Eisen at the company headquarters in Beaverton, Oregon, Hill made it clear that China is high on his to-do list. “The difference in the China market versus United States as an example is that it’s a mono-brand store. Physical retail is Nike only, and that I think we went too sportswear oriented and not sport enough. Now, we’re reevaluating the concepts that we have in China,” Hill said. The master plan is to refocus on Nike’s connection to sports around the world, including China, the world’s second-biggest economy, which has more than 1.4 billion people. Nike’s new direction is sports-themed stores. “We have a running-led store that is starting to sell through really well [there] because it’s anchored in sport. It has a point of view around sport. There are 5,000 [Nike stores in China], so it’s just going to take time for us to roll those concepts out, but feel good about the consumer-led sports-led concepts there,” Hill told Eisen. Last week, after Nike delivered promising quarter results that indicated progress in Hill’s turnaround, Jim Cramer acknowledged that Nike stock is on the right track. But he said the next leg higher depends on China: “We won’t get to $90 if he hasn’t solved the conundrum of China.” Nike sales in Greater China fell more than 9% to $1.51 billion in the latest quarter, but did exceed expectations. China sales in the quarter were nearly 18% of total Nike revenue. On the post-earnings call, Hill attributed the sales stumble in China to “structural challenges in the marketplace.” Another headwind for Nike in China is U.S.-imposed tariffs that make it more expensive to import goods that are manufactured there. Nike projects roughly $1.5 billion in related costs for fiscal year 2026, up from the $1 billion estimate three months prior. “We now expect the net headwind in fiscal 2026 to increase from approximately 75 basis points to 120 basis points to gross margin,” CFO Matt Friend said on…
Read More: Nike’s comeback hinges on China — how CEO Elliott Hill plans to fix it