Nike’s Turnaround Story Shows Momentum, But Can They Counter China? Following a period of significant challenges, including shifting consumer preferences and persistent supply chain disruptions, the sportswear industry is experiencing a notable resurgence in demand, offering a positive outlook for major players like Nike, Inc. (NYSE: NKE). This renewed momentum warrants a closer examination of Nike’s recent financial performance and strategic decisions, particularly in light of ongoing global economic uncertainties. B of A Securities analyst Lorraine Hutchinson recently maintained a Buy rating on Nike, with a price forecast of $84.00, following the company’s first-quarter earnings release. The analyst’s confidence is fueled by the substantial recovery observed in Nike’s first-quarter results, which surpassed analyst expectations across key metrics. In September, Nike reported revenue of $11.72 billion, exceeding the anticipated $11 billion and earnings of 49 cents per share, surpassing the previously estimated 27 cents per share. This strong performance highlights the effectiveness of Nike’s strategic initiatives and the growing consumer appetite for its products.

Key drivers of this positive momentum are evident across Nike’s various regions and product categories. Apparel sales demonstrated a robust 10% increase, fueled by impressive growth in North America (16%), Europe, Middle East, & Africa (EMEA) (8%), and Asia Pacific & Latin America (APLA) (10%). Footwear also showed signs of recovery, albeit at a more moderate 2% overall growth, with regional variations including 5% growth in North America, 4% in EMEA, and 5% in APLA. These figures underscore the breadth of Nike’s market appeal and the effectiveness of its distribution strategies, particularly the expansion of its value-channel sell-in. The company’s ability to capitalize on increased demand, coupled with strategic distribution efforts, is a crucial element of its successful turnaround.

However, a notable area of concern emerged in Greater China, where footwear and apparel units experienced a decline of 11% and 2%, respectively. This contraction represents a challenge to Nike’s overall growth trajectory and necessitates a thorough investigation into the underlying factors. Analyst Lorraine Hutchinson attributes this weakness to broader macroeconomic conditions and increased competition within the Chinese market. Despite this setback, Nike anticipates a recovery in margins, projecting easing pressure in the second half of the year. This expectation is based on favorable comparisons against last year’s wholesale support actions, which helped mitigate tariff impacts and navigate volatility in China and Converse. Furthermore, the company expects continued margin recovery due to improved operational efficiencies and strategic sourcing initiatives.

Addressing inventory imbalances is another critical focus. Greater China witnessed a substantial 11% decrease in inventory, a positive development that reflects Nike’s efforts to optimize its supply chain. However, elevated closeout inventory remains a concern, and APLA experienced a 9% increase, requiring additional measures to rebalance stock levels. These inventory adjustments are essential for maintaining operational efficiency and ensuring adequate product availability across key markets. The company’s strategic approach to inventory management is a key indicator of its ability to adapt to evolving market dynamics and maintain a competitive advantage. Nike's strategic decisions, including the temporary pause of its share buyback program, reflect a prudent approach to capital allocation, conserving cash amid lower earnings expectations. Investors can gain exposure to Nike stock via VanEck ETF Trust VanEck Morningstar Wide Moat Value ETF (BAT:MVAL) and Invesco Dow Jones Industrial Average Dividend ETF (NYSE:DJD).

NKE Price Action: Nike, Inc. shares were down 0.53% at $71.55 at the time of publication on Monday. The stock is trading within its 52-week range of $52.28 to $84.76, according to Polygon data. Read Next: Nike Just Did It—Turned $1.5 Billion Pain Into Performance Photo by Roman Zaietz via Shutterstock © 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.