Nike ends Top Sports online sales as China revenue slides 17%

Nike will terminate all online sales of its products through Top Sports, the Chinese retailer said, as the US sportswear giant tightens its China distribution.

"Our marketplace has become so fragmented and cluttered," Cathy Sparks, vice president and general manager of Greater China at Nike, said. "What consumers want is an experience that's premium, true to the brand, trustworthy, and certainly connected between digital and physical."

Starting in January, key sportswear retailers including Top Sports will stop selling Nike's clothing and shoes online and will instead pivot to in-store sales, Sparks said. Nike's products will be sold through new Nike-branded digital storefronts on Tmall, JD.com and Douyin, as well as Nike's website and app. The majority of Nike's 16 store partners in China will stop selling online, a Nike spokesperson said.

China, Nike's third-largest market, saw sales fall 17% on a constant-currency basis in the fourth quarter, steepening from a 10% decline in the prior quarter. BNP Paribas senior analyst Laurent Vasilescu called the e-commerce shift a "strategic misstep" that would hand opportunities to competitors, adding that Nike has a product problem, not a distribution problem.

Top Sports is one of Nike's largest retail partners in China, operating thousands of stores across the country. The company, listed on the Hong Kong exchange under ticker 6110, derives a substantial portion of its revenue from selling Nike products through both online and offline channels. The termination of online sales represents a major shift in Nike's China strategy under Chief Executive Officer Elliott Hill, who has pushed to refocus on direct-to-consumer channels since taking the helm nearly two years ago.

Nike has appointed a vice president of local product creation in Greater China to release products more relevant to Chinese consumers, Sparks said. The company faces mounting competition from fast-rising domestic rivals Anta and Li Ning, which have chipped away at its market share, as well as foreign brands On and Hoka that have surged in popularity.

For Top Sports, the loss of Nike's online channel removes a significant revenue stream and raises questions about the long-term viability of its partnership with the US brand. Investors will watch for the company's next earnings report for updated guidance on how it plans to offset the shortfall and whether it can pivot to other brands to fill the gap.

This article is for informational purposes only and does not constitute investment advice.