Summary of Key Points
Nike’s revenue in China has been declining for eight consecutive quarters, with the Greater China region being the only major market to experience negative growth (a 11.2% decrease in fiscal year 2026, resulting in a loss of $739 million). To turn things around, Nike is taking steps such as revoking online sales rights from distributors (like Taobao) in an attempt to regain control over consumer relationships. The company has also launched the NikeSKIMS brand in collaboration with Kim Kardashian, targeting the female market, which it has struggled to penetrate for a long time. However, NikeSKIMS faces challenges including product controversies (such as poor athletic fit and early discounts), as well as the diminishing benefits of the Chinese market (slowing growth of competitors like Lululemon and the entry of new players like Alo). The success of NikeSKIMS hinges on its ability to retain customers, rather than simply relying on the fame of Kim Kardashian.
Detailed Analysis
1. How difficult is Nike’s situation in China? Revenue decline, and the online business is struggling
Nike’s difficulties in the Greater China region are not short-term: revenue for the entire fiscal year 2026 fell by 11.2%, with China accounting for 79% of the company’s new North American revenue losses. The decline was even more pronounced in the fourth quarter (a 12% decrease in reported figures and a 17% decrease when exchange rates are factored in).
The situation with sales channels is even worse: wholesale revenue dropped by 14%, and the direct-to-consumer (DTC) business decreased by 12%, with the digital business plummeting by 29% (while physical store sales only fell by 4%). The online channel, which should be a direct way for the brand to connect with consumers, has become a weakness, as customers purchase through distributor platforms instead of Nike’s own app or website, preventing Nike from gaining valuable customer data and relationships.
2. NikeSKIMS: Leveraging Kim Kardashian to enter the female market
Approximately 40% of Nike’s customers are women, but for decades, the brand has been designing products for men using a masculine sports-oriented approach (emphasizing performance and athlete endorsements). This strategy has been influenced by competitors like Lululemon, which have shown that women buy sportswear not just for exercise but also for style, fabric, and daily wearability.
NikeSKIMS understands this better; the brand started with shapewear and has a deep understanding of female body types and aesthetics. It has also associated itself with sports events like the Olympics and the NBA to appeal to women. The stock market reacted positively to the collaboration, with Nike’s stock rising by 6.2% and its market value increasing by $6.7 billion on the day the news was announced.
However, the product has some significant issues: customers have complained about problems such as high-cut shorts, slipping shoulder straps, and insufficient support. Additionally, the brand entered the discount section within less than a year of launch, undermining the premium image it had built through scarcity.
3. Regaining control of channels and opening new stores: Nike’s effort to reconnect with Chinese consumers
Nike is taking aggressive steps to re-establish its presence in China, such as launching NikeSKIMS in the most expensive shopping malls (like Shanghai’s Xingye Taikoo Hui, adjacent to LV) and revoking online sales rights from distributors like Taobao. These actions aim to directly control consumer interactions. While revoking distributor online sales is not just about shifting to a DTC model, it also reflects Nike’s willingness to accept short-term losses (analysts predict negative impacts in the Greater China region will continue into fiscal year 2027) in order to regain customer data and relationships. Analysts warn that this could be a strategic mistake, as distributors like Taobao were once a key entry point for young consumers purchasing Nike products, and their removal may open the market up to competitors like Adidas and HOKA.
4. Entering a market with diminishing benefits: The challenges of launching NikeSKIMS in China
NikeSKIMS is entering a market where the advantages it enjoyed initially (such as Lululemon’s early success) are no longer present:
- Lululemon’s growth in China has slowed (from a peak of 46% to 20% in fiscal year 2026), and store saturation is high in major cities, while lower-tier markets have lower sales per square meter.
- Competitor Alo had a successful launch in China, with pre-sales on Tmall exceeding tens of millions in just one minute, thanks to early endorsements by Zhao Lusi, online marketing, and community events.
- Nike itself has been cautious in expanding in China; it still doesn’t have official retail stores five years after launching, and its first store in Hong Kong was managed by a third-party operator, indicating a lack of confidence in the local market.
5. The real test for NikeSKIMS: Retaining customers
The launch of NikeSKIMS’ first store in Shanghai is expected to be a success (with the presence of Kim Kardashian and a prime location), but this is just a “traffic-generating event.” The real challenges are:
- How long can the attention generated by Kim Kardashian last? Will customers return for the products themselves?
- Can Nike’s product flaws be resolved? There is a natural conflict between the design philosophy of shapewear (fitting the body) and sportswear (functionality for exercise); for example, comfort may be compromised during yoga practice.
- Can NikeSKIMS help the brand recover? Nike has not yet disclosed its revenue, but for a brand that’s been around for over a year, filling the $739 million gap in Greater China is unlikely. However, if it can attract female customers back to Nike’s app or physical stores, that would be considered a success.
In summary, Nike’s efforts in China are a bold attempt at a “last-ditch” strategy. Revoking distributor online sales and launching NikeSKIMS are aimed at gaining control over consumers. However, challenges such as product issues, fading market benefits, and competitive pressure make this mission difficult. In the short term, NikeSKIMS may attract traffic; in the long run, only by addressing product quality and customer retention can Nike reverse its declining fortunes.