Nike China channel reshuffle: the online business of two major dealers has been withdrawn, and tens of billions of revenue are facing reconstruction
After Taobao (06110.HK) announced before the market today that it will terminate its online cooperation with Nike in January next year, another Nike distributor Baosheng International (03813.HK) issued an announcement during the midday break saying that it had received notice from Nike that online platform sales of Nike products in mainland China will also be completely terminated starting from January 1, 2027. As of today's close, Baosheng closed at HK$0.315 per share, down 8.7%. Compared with Taobao's Nike online business, which accounts for 22% of the group, Pousheng's distribution of Nike's online products accounts for a slightly smaller proportion.
After Taobao (06110.HK) announced before the market today that it will terminate its online cooperation with Nike in January next year, another Nike distributor Baosheng International (03813.HK) issued an announcement during the midday break saying that it had received notice from Nike that online platform sales of Nike products in mainland China will also be completely terminated starting from January 1, 2027. As of today's close, Baosheng closed at HK$0.315 per share, down 8.7%. Compared with Taobao's Nike online business, which accounts for 22% of the group, Pousheng's distribution of Nike's online products accounts for a slightly smaller proportion. According to Baosheng’s announcement, in the fiscal year ending December 31, 2025, revenue contribution from online platform sales of Nike products accounted for approximately 15% of the company’s total revenue. Unlike Taobao, which admitted that the termination of the cooperation will have a "significant adverse impact" on the company's business in the short term, Pousheng said that Nike's online business did not contribute significantly to the company's profit. The competition for sports consumer goods in the Chinese market is becoming increasingly fierce. In order to maintain market share, many international brands have begun to engage in price wars by exchanging price for volume. But it also makes life difficult for their dealers. Like Taobao, Baosheng mainly distributes sports brands such as Nike and Adidas. In March this year, the company handed over its worst report card in three years: operating income in 2025 was 17.132 billion yuan, a year-on-year decrease of 7.2%; the profit attributable to the company's owners was 210 million yuan, a year-on-year decrease of 57.1%. A report from BoCom International Securities believes that the company's performance decline was mainly affected by the drag on offline channels, deepening discounts and the negative impact of operating deleveraging. The full-year discount deepened by low single digits, causing the gross profit margin to fall by 0.7 percentage points year-on-year to 33.5%. According to the financial report, Pousheng has great inventory pressure, with inventory turnover days increasing from 145 days in 2024 to 160 days in 2025, and the proportion of old inventory (more than 12 months old) is controlled below 7%. Some dealers in the industry told reporters that the turnover days have increased, but the current old inventory still remains in single digits, which means that dealers need to increase discounts to speed up inventory clearance. Baosheng is also increasing the proportion of its online business. Last year, the company achieved over 70% sales growth in live broadcast e-commerce such as Douyin. However, the aforementioned dealer told reporters that Douyin’s unit price is not advantageous compared with other platforms, and is even lower. "You can go to some e-commerce platforms and observe. Nike's discounts have been many and huge in the past two years." This may be why Pousheng said that Nike's online business does not contribute significantly to the company's profits. In order to offset over-reliance on a single brand, Pousheng has also made a multi-brand layout to cover more market segments. Currently, Baosheng holds the exclusive agency rights in China for PONY, XEXYMIX and other brands. Korean yoga brand XEXYMIX has high hopes from Pousheng International. The market generally believes that it is the "counterpart" to lululemon, because although it also focuses on yoga clothing, its price is only about half of lululemon. The reporter learned from the interview that in order to keep up with the rapid development of China's e-commerce, Nike had delegated power to major dealers and weaved a huge digital sales network. In addition to official channels, a large number of online stores opened by offline dealers, as well as secondary distributor networks, jointly shoulder the sales task. This model did help Nike achieve broad coverage in the Chinese market during the expansion period. However, as market competition intensified, its drawbacks became more and more obvious: a large number of distributors operated independently, the price system among different stores was not unified, and the discount intensity varied greatly, which also made it difficult to maintain a consistent consumer experience. As a result, after the recent changes and adjustments at the top level of Nike's Chinese market, the company has also adopted a series of reform strategies. Nike issued a statement today saying that it will reshape the brand's market ecology starting from digital channels.
According to the data released by Baosheng today, Nike's current online business in the company is nearly 2.6 billion yuan a year, plus Nike's online business in Tabo, which is 5.7 billion yuan, the two companies bring more than 8 billion yuan in online business to the brand a year. These are not the only two Nike dealers in China. And if you include the resumption of the online business of other distribution agents, this may "recover" more than 10 billion yuan in business for Nike. Nike's (NKE.US) fiscal year 2026 results show that the Chinese market's annual revenue was US$5.847 billion (approximately 39.69 billion yuan). The aforementioned people believe that this restructuring of channel order led by Nike is kicking off a new round of reshuffle in the sporting goods industry. In the past, dealers were equivalent to free traffic contacts and extensive product distribution contacts. In the short term, it is difficult to say whether brand direct sales can take over the original distribution volume, because dealers used to carry huge online sales; there is a ceiling in the traffic, conversion, and SKU carrying capacity of direct flagship stores. If it cannot fill the sales gap, it will directly amplify the pressure on Nike China’s revenue to decline for multiple consecutive quarters.
According to the data released by Baosheng today, Nike's current online business in the company is nearly 2.6 billion yuan a year, plus Nike's online business in Tabo, which is 5.7 billion yuan, the two companies bring more than 8 billion yuan in online business to the brand a year. These are not the only two Nike dealers in China. And if you include the resumption of the online business of other distribution agents, this may "recover" more than 10 billion yuan in business for Nike. Nike's (NKE.US) fiscal year 2026 results show that the Chinese market's annual revenue was US$5.847 billion (approximately 39.69 billion yuan). The aforementioned people believe that this restructuring of channel order led by Nike is kicking off a new round of reshuffle in the sporting goods industry. In the past, dealers were equivalent to free traffic contacts and extensive product distribution contacts. In the short term, it is difficult to say whether brand direct sales can take over the original distribution volume, because dealers used to carry huge online sales; there is a ceiling in the traffic, conversion, and SKU carrying capacity of direct flagship stores. If it cannot fill the sales gap, it will directly amplify the pressure on Nike China’s revenue to decline for multiple consecutive quarters.