Live Coverage of the Earnings Conference: Nike's Rebuilding Is Not Yet Complete, China Market Remains the Toughest Battle

Ask AI · How does the Barcelona analogy from Nike CEO reflect the company’s transitional pains?

Original | Flowing Business Author | Li Wei

In early February 2026, Nike CEO Elliott Hill left the headquarters in Oregon for a 16-day journey, one of the stops was flying to Italy for the Winter Olympics, and meeting with the French football team in Monaco.

One of the destinations was the Camp Nou stadium in Barcelona, where a €1.5 billion renovation project was underway.

At Camp Nou, Hill was treated like a VIP, Barcelona interim chairman Rafa Yuste delivered a welcome speech, and staff served appetizers like foie gras and Italian wraps. But what left the deepest impression on Hill wasn’t the food, but the noisy chaos of the matches and cheers.

On March 31, near the end of Nike’s latest quarterly earnings call, he used the scene at Camp Nou to describe his current situation. He saw a massive project still under construction, with scaffolding above the stands, cranes in the corners, many areas still unfinished; yet the game continued, fans cheered, and players fought for victory.

Hill said, this is Nike today — enduring short-term pressure while rebuilding the future. This metaphor is more accurate than any official statement; it shows that Nike’s problems are not sudden deceleration, but that a once-champion company is reconstructing its foundation at the cost of current results.

The latest financial report shows Nike’s third quarter of fiscal 2026 revenue at $11.28B, roughly flat according to report standards, down 3% at fixed exchange rates; gross margin fell to 40.2%; earnings per share $0.35; net profit down 35% year-over-year. Self-operated business revenue was $4.5 billion, down 4% on report basis; distributor business revenue was $6.5 billion, up 5%.

Nike Greater China revenue was $1.61B, down 10% year-over-year, with inventory units down over 20% year-over-year.

The company expects Q4 revenue to decline another 2% to 4%, with Greater China roughly down 20%.

This report card isn’t a collapse, but also far from reassuring. Investors aren’t seeing a Nike that has resumed growth, but a company still clearing issues and paying ongoing costs.

It’s not just about product and channel repair

From industry conditions, Nike faces a tougher market than before. In recent years, the global sportswear industry has clearly entered a phase of segmentation, with consumers shifting from large, all-in-one brands to more specialized running, outdoor, and high-performance products. Retailers are no longer willing to give giants the largest shelf space, but emphasize full-price sales, inventory efficiency, and category differentiation.

Adidas, On, HOKA, and Chinese brands Anta and Li Ning are continuously capturing consumers in their strong categories. Nike’s moat built on brand volume, scale, and distribution hasn’t disappeared, but it’s no longer as solid as before.

That’s why Hill’s current push isn’t a simple promotion or new product cycle, but a reconstruction of business logic. In recent years, Nike has invested more in direct stores and digitalization, trying to connect directly with consumers through a stronger DTC model. But in practice, this approach brought issues: damaged channel relationships, deteriorating inventory structure, excessive digital platform promotions, ultimately eroding brand and profitability.

Hill said plainly in the earnings call that Nike’s past few years prioritized direct sales, but now it must return to a more balanced market system, regaining share where consumers shop.

Nike’s current core strategy isn’t to first boost revenue, but to first restore business health. Management calls this the Win Now initiative. It includes clearing unhealthy inventory, especially old models of classic shoes; refocusing on running, football, and other professional sports categories; repairing relationships with wholesale partners; and rebuilding clearer operational rhythms across markets, channels, and brands.

This quarter, Nike continued to actively reduce inventory of classic shoes, which dragged about 5 percentage points from performance. Management admits this will pressure short-term revenue, but believes it’s necessary to improve market health, revenue quality, and future growth foundation.

From what’s disclosed so far, Nike’s recovery isn’t without bright spots. Running is the most obvious. This quarter, Nike’s running business grew over 20%, repeatedly highlighted by management as a model. Hill said, the organization around running has proven that focusing on athlete insights, clear product structures, channel differentiation, and storytelling in stores is effective.

Football is seen as the next key area for transformation. Around the 2026 World Cup, Nike will launch new versions of Mercurial, Tiempo, and Aero-FIT, aiming to rebuild its presence in the global football market through the tournament.

Another main thread is innovation. Nike needs to prove to the market that it can still create truly recognizable new products, not just recycle classics. The company highlighted Nike Mind platform this quarter, claiming over 150 patents filed worldwide, with the first product Mind 001 sold out across regions, and over 2 million consumers registered for alerts on the official website.

Nike also showcased new tech platforms like Liquid Air Max and Aero-FIT, aiming to build a product foundation that spans sports and price points. For Nike, innovation remains the core story, but this time, management emphasizes that innovation must be combined with channel efficiency, product structure, and long-term scalability, rather than just marketing gimmicks.

North America is currently the closest to a “construction site still holding matches.” In Q3, Nike’s North America revenue grew 3%, wholesale up 11%, direct down 5%, but digital sales gradually improved within the quarter, with February marking the first positive growth across all channels in two years.

Management specifically mentioned that the NBA All-Star Weekend helped Nike connect with consumers in Los Angeles and strengthened partnerships with Shoe Palace, DICK’S, Foot Locker, and others. In other words, North America gave Nike some evidence that this approach of balancing direct and wholesale channels, and integrating sports events and channels, can work.

But Nike’s problems go beyond sales. This quarter, the company recorded $230 million in employee-related severance costs, mainly involving supply chain and tech teams. CFO Matthew Friend explained that during the pandemic, to support larger digital and direct businesses, Nike accelerated investments in supply chain and technology, creating a higher fixed cost base.

Now, amid declining revenue and strategic shifts, Nike must readjust this cost structure to be leaner and more flexible, leaning toward variable costs in the future. This means Nike’s recovery isn’t just about product and marketing repair, but also a systemic overhaul of back-end systems and organizational structure.

China: Nike’s toughest battle

Among all regions, China is Nike’s most complex and decisive battleground right now.

In Q3, Greater China revenue was down 10% year-over-year, with NIKE Direct down 5%, digital down 21%, wholesale down 13%. Nike doesn’t fully blame external factors but admits it’s actively controlling sell-in, clearing digital channels, and reducing old inventory.

Management said Nike has expanded store pilots to 100 stores, including the Shanghai House of Innovation, improving traffic and same-store sales through optimized product selection, displays, and replenishment; meanwhile, inventory in Greater China is down double digits year-over-year, with partner inventories also down double digits.

More critically, the company believes this adjustment won’t end soon. Matthew Friend explicitly stated that Nike will continue to reduce near-term shipments to match the true full-price demand in China, and keep compressing promotions and old models in digital channels. These actions will continue to weigh on revenue into FY2027. In Q4, Greater China revenue is expected to decline about 20% again.

This means Nike faces not just sluggish sales in China, but deeper structural issues.

In recent years, the landscape of Chinese sports brands has shifted significantly. Local competitors like Anta and Li Ning have gained market share through faster product updates, stronger local channel control, and more flexible pricing strategies. Adidas has also gradually regained momentum through deeper localization and product strategies.

Nike still has brand appeal, and China remains a key opportunity market for management. Cathy Sparks has been appointed Vice President and Greater China General Manager, aiming to bring new perspectives on market development based on her experience managing complex markets, and to further strengthen strategic execution and transformation.

Hill said in the earnings call that serving China’s 1.4 billion potential sports enthusiasts remains one of the most powerful opportunities in the global sports industry. But the challenge behind that statement is clear: today’s Chinese market won’t wait for Nike to recover just because it was once strong. Nike must reprove itself as both a premium sports brand and a brand that truly understands local consumers.

This battle is more difficult and requires more patience than North America.

From this perspective, Hill’s use of the Camp Nou analogy at the end of the earnings call isn’t just rhetoric. It’s an explanation to the market of a harsh reality: Nike won’t suddenly return to its past in one quarter. It now has to compete while under construction, enduring short-term pressure on revenue, profit, and stock price, while reordering its product lineup, channels, organization, and brand narrative.

Expect the capital markets to have enough patience for this long-term project, especially as competitors accelerate. Nike has little room for mistakes.

But Nike has not yet lost this race. Running and football are recovering, North American channels are warming up, inventories and costs are actively being managed, and management even expects gross margin to improve starting in Q2 FY2027.

The real suspense isn’t whether Nike can continue to tell stories of innovation and branding, but whether it can truly implement these stories into healthier full-price sales, more sustainable channel relationships, and more resilient profit structures. Only by doing so can the Camp Nou-style reconstruction become more than a metaphor — it can truly mark Nike’s next leap forward.