The past few years have been sluggish for the best-known sports brand, Nike, with its stock trading near $61 and down by $22 over the last year. Although Nike brought in a new CEO, Elliott Hill, to fix the company, sales and operations exhibited few signs of improvement, and management still suggests the recovery will be prolonged.
Nike’s home market, North America, showcased slight upward momentum, with the running category experiencing a 20% surge in the second quarter. Will it really be a good sign for the investors amid Nike’s ongoing struggles in China?
Bullish Momentum in the Home market- Ignited Investor Hope in Nike
The total revenue of Nike was up by 1%, reaching $12.1 billion in late 2025 due to the impressive growth in its home market, North America. The wholesale revenue of the brand was up by 8%, hitting $7.5 billion, and overall, Nike generated revenue totalling $5.6 billion from its home market.
The running category of Nike experienced 20% growth in two consecutive quarters, signalling that the innovations and new product launches are gaining strong traction among athletes.
Nike’s Performance in China is Stalling
Amidst Nike’s outperformance in the home market, the brand has been experiencing a multi-year slowdown in its Greater China market. Nike is losing its cultural relevance in China as domestic brands like Li-Ning and Anta are increasingly favoring the taste of Chinese customers. The local brands are benefiting from the Guochao movement, which encompasses the people’s consideration to adopt and consume homegrown brands.
Additionally, Nike’s plan to relocate its contracts manufacturing plants from China to other countries due to high tariffs also led the company to lose its competitive edge in the country.
The footwear category, which makes roughly 15% of the annual revenue of the brand, dropped by 21% in China. The CEO acknowledged this slump by suggesting that the brand needs to reset its approach in China. Nike’s grip in China is actually slipping, while its performance in the home market, North America, is gaining ample momentum.
Will Nike Hit $70 in 2026?
Despite witnessing strong growth in the home market, Nike is losing ground in international markets, with non-U.S. revenue falling 5% yearly. Nike faces terrible headwinds in the Chinese market, which are compounded by surging competition from local brands and ongoing trade wars between the countries. The ongoing challenges pulled down the revenue and market share of Nike in China.
Slower sales in the international markets led earnings per share of Nike to drop 35% year over year in the quarter and 30% year to date. Operating margins are under pressure as marketing expenses continue to climb relative to total revenue.
Although the company fundamentals experience significant declines, Nike’s valuation remains high with 39x current-year EPS, reflecting higher investor confidence in the growth potential of the company. Nike’s performance in its core product line, running shoes, looks impressive, while management suggests that recovery is underway but will take time to complete. The stock is likely to continue underperforming until Nike makes a strong comeback by reporting a rebound in international markets.
