Pou Sheng International Holdings Ltd

Nike has notified Pou Sheng International that online sales of Nike products in mainland China will fully cease from January 1, 2027, removing a channel that accounted for about 15% of Pou Sheng's 2025 revenue but only a small share of its profit. The decision is part of Nike's broader marketplace reset aimed at improving margins and supporting full-price sales, though it may temporarily pressure revenue in Greater China. JPMorgan recently downgraded Nike to Underweight, citing a potential US$1 billion China headwind and earnings pressure through fiscal 2028. Nike's investment narrative projects $49.0 billion in revenue and $3.7 billion in earnings by 2029, requiring 1.8% annual revenue growth and a $0.6 billion earnings increase from the current $3.1 billion.

Nike will stop selling through partner-operated online storefronts in China starting January 2027, a move Bernstein analysts say should lift the company's China operating margins by 200 basis points to 24% in fiscal 2027 but will also erase roughly $1 billion in revenue as the wholesale online channel is wound down. The channel represents a high-teens percentage of Nike's China business, and its elimination is expected to cause a low-teens constant-currency decline in China for fiscal 2027, dragging total company growth by 2 percentage points. Nike's digital presence in China will thereafter be limited to its direct web and app channels and official flagship stores on Tmall, JD.com, and Douyin, a shift aimed at curbing gray-market resellers and deep discounting that management says has hurt brand perception. Bernstein cut its Nike price target to $68 from $72 and lowered fiscal 2027 earnings-per-share estimate to $1.96 from $2.10, while maintaining an outperform rating. The broker named Adidas as the biggest near-term beneficiary, as partners like Topsports and Pou Sheng will need to replace lost Nike online volume, and also sees domestic brands Anta and Li Ning gaining at lower price points.

Nike is ending all online sales of its products in mainland China through distributor Pou Sheng starting January 1, 2027, a channel that accounted for 15% of Pou Sheng's 2025 revenue. Nike shares have fallen 32.11% year to date and 41.45% over the past year, closing at $42.96. The most followed valuation narrative pegs Nike's fair value at $36.83, suggesting the stock is overvalued, while its current price-to-earnings ratio of 20.5 times sits below the US luxury industry average of 21.7 times and a fair ratio of 26.9 times. The company maintains a solid operating margin above roughly 10% and a return on invested capital nearly double its cost of capital, though revenue growth is projected at around 3% over the next couple of years. Investors are weighing weaker demand, the China restructuring, and a slower turnaround against completed buybacks and product plans.