Nike Faces 17% Revenue Decline in China for Q2 2026, Urgent Turnaround Needed
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 24 2025
0mins
Should l Buy NKE?
Source: Fool
- China Market Challenges: In Q2 2026, Nike generated $1.4 billion from its China segment, accounting for 11% of total revenue, but faced a 17% year-over-year decline, indicating weak demand that could impact overall performance.
- Turnaround Strategy Implementation: Since taking over a year ago, CEO Elliott Hill has implemented a 'Win Now' strategy focusing on refreshing wholesale relationships and boosting product innovation, which is seen as crucial for the company's turnaround despite short-term difficulties.
- Financial Expectations: Analysts forecast a 1% revenue increase for fiscal 2026, while earnings per share are expected to drop by 28%, highlighting significant challenges that the company must overcome during its transformation, necessitating close monitoring of these financial metrics by investors.
- Maintaining Brand Advantage: Nike continues to leverage its strong brand influence and high-profile athlete endorsements to maintain an edge in the competitive sportswear market, with management needing to rely on brand excitement to support future market performance.
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Analyst Views on NKE
Wall Street analysts forecast NKE stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for NKE is 76.11 USD with a low forecast of 62.00 USD and a high forecast of 110.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
21 Analyst Rating
14 Buy
7 Hold
0 Sell
Moderate Buy
Current: 62.700
Low
62.00
Averages
76.11
High
110.00
Current: 62.700
Low
62.00
Averages
76.11
High
110.00
About NKE
NIKE, Inc. is engaged in the designing, marketing and distributing of athletic footwear, apparel, equipment and accessories and services for sports and fitness activities. The Company's operating segments include North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA). It sells a line of equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities. It also designs products specifically for the Jordan Brand and Converse. The Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused on basketball performance and culture using the Jumpman trademark. The Company also designs, distributes and licenses casual sneakers, apparel and accessories under the Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Advertising Impact: In the Nike advertisement aired post-victory, former player Marshawn Lynch emphasized the theme of “Bitter Tastes Good,” highlighting the value of hard work, which attracted consumer attention and reinforced Nike's brand image, showcasing its powerful influence in sports advertising.
- Nike's Market Reaction: Nike's shares surged in overnight trading following the Super Bowl ad, reflecting market optimism regarding the brand's revival, despite a nearly 10% decline in stock price over the past year, investors are hopeful about new CEO Elliott Hill's strategic repositioning efforts.
- Retail Sentiment Analysis: Although Nike's follower count on social platforms increased by 8%, retail sentiment remains in the 'bearish' territory, indicating cautious market outlook on Nike's future performance, which could impact its short-term stock price.
See More
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- Historic Milestone: The Dow Jones Industrial Average surpassed 50,000 for the first time in 2026, marking a significant achievement since its inception in 1896, reflecting sustained investor confidence amid economic fluctuations.
- Tech Stock Influence: This milestone was largely driven by strong performances from technology stocks, particularly Nvidia's replacement of Intel, highlighting the market's heightened focus and investment enthusiasm in the artificial intelligence sector.
- Market Rebound: Following a downturn in 2022, the Dow rebounded nearly 13% in 2023, with this breakthrough occurring against the backdrop of the index climbing over 1,100 points, demonstrating a robust market recovery.
- Changing Economic Landscape: Despite concerns over Trump's tariff policies and the impact of AI spending, the market has shown resilience, indicating investor optimism regarding future economic growth.
See More
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- Dow Jones Rebound: On Friday, the Dow Jones surged over 950 points, nearly 2%, indicating a strong market rebound, which Jim Cramer described as a 'mighty Dow rally', boosting investor sentiment.
- Amazon Stock Decline: Despite the overall rise in Dow components, Amazon's stock fell 7.5% due to massive spending plans and weaker-than-expected guidance revealed in Thursday's earnings report, impacting investor confidence.
- Eli Lilly Share Recovery: Eli Lilly shares bounced back 3% on Friday after an almost 8% drop, as the FDA announced actions against illegal copycat drugs, which bolstered market confidence in Lilly's growth potential.
- Linde Rating Downgrade: Following a 2.9% decline post-earnings on Thursday, Linde shares dropped another 1.7% on Friday after JPMorgan downgraded its rating to hold, although Jim Cramer maintained a buy rating and raised the price target to $510.
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- Legal Action: The EEOC has filed a subpoena enforcement action in federal court to compel Nike to provide information related to the allegations, examining whether there is a pattern of disparate treatment in hiring, promotions, demotions, and layoffs.
- Company Response: A Nike spokesperson stated that the company has been cooperating extensively with the EEOC inquiry, having shared thousands of pages of information and is in the process of providing additional details, emphasizing their good-faith participation.
- Source of Complaints: The complaints against Nike were filed by America First Legal, a law firm co-founded by Trump advisor Stephen Miller, which has also lodged similar complaints against other companies, indicating a broader industry scrutiny.
See More
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- Lawsuit Background: The EEOC filed a lawsuit against Nike in a Missouri federal court on Wednesday, seeking information related to alleged discrimination against white employees, highlighting potential issues within the company's Diversity, Equity, and Inclusion (DEI) initiatives.
- Layoff Criteria Investigation: The EEOC is requesting details on Nike's layoff criteria, the use of race and ethnicity data, and programs that may have limited mentoring and leadership opportunities based on race, which could impact the company's reputation and employee morale.
- Increasing Financial Pressure: Despite setting diversity goals in 2022, CFO Matt Friend warned during the recent earnings call of expected low single-digit revenue declines and a 175-225 basis point drop in gross margins, indicating significant financial challenges ahead for the company.
- Stock Price Fluctuation: Nike's stock has declined 16.29% over the past year, yet it rose 5.40% on Wednesday to close at $64.22, reflecting a cautious market sentiment regarding the company's future performance.
See More
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- Job Cuts and Automation: Nike announced the reduction of 775 jobs at its U.S. distribution centers as part of ongoing automation efforts, which not only aims to enhance operational efficiency but may also reduce costs in the short term, potentially improving financial performance.
- Mixed Technical Indicators: Currently, Nike's stock is trading below both its 20-day and 100-day simple moving averages, indicating short-term weakness, with a 17.22% decline over the past 12 months, positioning it closer to its 52-week lows, reflecting market concerns about its future performance.
- Declining Earnings Outlook: The upcoming earnings report on March 19, 2026, is expected to show earnings per share dropping to 30 cents from 54 cents year-over-year, with revenue estimates at $11.25 billion, highlighting the growth challenges the company faces.
- Analyst Ratings and Targets: Despite receiving a 'Buy' rating with an average price target of $79.70, recent adjustments by analysts indicate market divergence regarding its future performance, with BTIG maintaining a $100 target while Needham downgraded to Hold.
See More
