--- title: "There are still 5 months left before Topsports loses Nike." type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/43150964.md" description: "There are less than 5 months left before Topsports fully terminates the online sales of Nike products in mainland China. On July 22, Topsports announced that starting from January 1, 2027, the company will completely cease online platform sales of Nike products in mainland China. On the day the news was announced, Topsports' market value evaporated by 2.8 billion HKD in a single day. The announcement showed that this part of the business accounted for 22% of Topsports' revenue in the last fiscal year. For Topsports, whose revenue and profits are both declining, a gap of nearly one-quarter of its revenue is undoubtedly adding frost to snow. Since beginning operations with Nike products in 1999..." datetime: "2026-08-03T09:14:31.000Z" locales: - [en](https://longbridge.com/en/topics/43150964.md) - [zh-CN](https://longbridge.com/zh-CN/topics/43150964.md) - [zh-HK](https://longbridge.com/zh-HK/topics/43150964.md) author: "[朝阳资本论](https://longbridge.com/en/profiles/26763750.md)" --- # There are still 5 months left before Topsports loses Nike. There are less than 5 months left before Topsports fully terminates the online sales of Nike products in mainland China. On July 22, Topsports announced that starting from January 1, 2027, the company will completely cease the online platform sales of Nike products in mainland China. On the day the news was announced, Topsports' market value evaporated by 2.8 billion Hong Kong dollars in a single day. **The announcement showed that this part of the business accounted for 22% of Topsports' revenue in the last fiscal year.** For Topsports, whose revenue and profits are both declining, the potential gap of nearly one-quarter of its revenue is undoubtedly adding frost to ice. Since starting to operate Nike products in 1999, Nike has almost accompanied the entire growth process of Topsports' sports retail business. Now, after losing Nike's online business, Topsports' position as an industry TOP player has also become more uncertain. However, this recapture of rights did not come without cost for Nike. Nike's China business is also in decline. Whether the online sales volume previously completed by Topsports can be smoothly migrated to official channels is still a question mark. **A Game of Ants and Elephants** This cut by Nike truly struck at the main artery of Topsports. In the 2025/26 fiscal year, Topsports' revenue was 25.74 billion yuan. According to the disclosed 22%, the online retail revenue of Nike products distributed by Topsports is approximately 5.66 billion yuan. The recapture of sales rights for a business accounting for over 20% of total revenue will soon be reflected in the upcoming financial reports. Nike has taken back the online sales rights, while online happens to be one of the few growing segments for Topsports in the past year. In the last fiscal year, Topsports' revenue declined by 4.7% year-on-year, operating profit declined by 4.5%, and net profit attributable to shareholders declined by 1.5%. The company mentioned in its annual report that **the growth in online retail business offset some of the revenue decline despite continuous pressure on offline foot traffic.** Topsports did not separately disclose the profit situation of the Nike online business. From the perspective of gross margin, in the last fiscal year, intensified promotions in the online market led to higher discount rates for online business compared to offline, pulling down Topsports' overall gross margin by 0.4 percentage points. But online business does not need to bear store rent, decoration depreciation, and sales personnel costs on the same scale. BofA judged based on this that **after superimposing operating leverage, the profit impact caused by the termination of Nike's online business may be greater than the revenue impact,** and lowered the earnings forecasts for Topsports' 2027 and 2028 fiscal years by 13% and 35% respectively. It is unlikely to make up this revenue from other brands. In the 2025/26 fiscal year, the two major leading brands, Nike and Adidas, contributed 86.7% of Topsports' revenue, reaching 22.33 billion yuan; the combined revenue of other brands such as Puma, Asics, Li-Ning, HOKA, and Kailas was only 3.245 billion yuan, which is less than 60% of Nike's online business. In other words, even if calculated on a static basis assuming the overall revenue of other brands doubles, the new revenue would still not be enough to fill this gap. Looking at Nike, the situation is completely different. In the 2026 fiscal year, Nike's global revenue was $46.398 billion, and Greater China region revenue was $5.847 billion. **The online retail scale of Nike products distributed by Topsports converts to about $790 million, approximately equivalent to 1.7% of Nike's global revenue and 13.5% of its Greater China region revenue.** Admittedly, the online retail revenue of Nike products distributed by Topsports cannot be directly equated with the revenue contribution to Nike. After all, the former is retail revenue, including dealer markups, while the latter is wholesale revenue formed by Nike supplying goods to dealers. But the disparity in data is sufficient to show that the mutual dependence between the two parties is not on the same magnitude. Rather cruelly speaking, **in Nike's historical public financial report disclosures of important customers, Topsports has never been listed separately.** In 2005, Nike mentioned in its annual report that the Chinese market added about 1.5 retail outlets per day, with revenue nearly doubling compared to the previous year. At that time, Topsports was expanding rapidly and was a meritocrat in Nike's expansion in the Chinese market. But in that year's Nike annual report, the name of Topsports also did not appear. It needs to be pointed out that **Nike's financial dependence on any single distributor is relatively limited.** In the 2026 fiscal year, Nike's top three US customers collectively contributed 29% of local sales, while the top three customers outside the US accounted for 16% of non-US sales. Nike explicitly emphasized that no single customer's revenue share reached 10%. **Less than five months remain until Nike officially takes back online sales rights.** Although Topsports can still conduct offline sales of Nike products as a distributor, the online performance gap has become a certainty. For this giant elephant, Nike, perhaps Topsports' online revenue is as insignificant as an ant, and indeed, no single distributor is sufficient to sway the overall situation. But the market share and business prospects in Greater China cannot be ignored by Nike. Currently, Nike's Greater China business is still under continuous pressure, yet it chooses to strike at Topsports precisely when sales volume is most needed. This at least indicates that the original online distribution system has reached a point where Nike believes adjustment is necessary. **Reshaping Channels** The targets of Nike's strike extend far beyond just Topsports. On the same day, Power Sports International also confirmed that Nike will take back its online sales rights in mainland China starting from 2027. In 2025, Nike product online business accounted for about 15% of Power Sports' revenue, corresponding to over 2.5 billion yuan. Adding Topsports, **the two listed distributors together undertook over 8 billion yuan of Nike's online retail volume.** According to public disclosures, **starting from January 2027, most of the 16 offline retail partners of Nike in China will stop selling Nike products online.** Over 1,000 digital stores operated by partners will also shrink significantly, with e-commerce business shifting focus to Nike's official website, App, and flagship stores on platforms like Tmall, JD.com, and Douyin. Figure: Nike's digital market layout in Greater China covers multiple core platforms This clearly goes beyond a one-time interest adjustment between Nike and Topsports. **What Nike wants to reform is the online distribution system formed over many years.** Kai Xi Shen, Vice President and General Manager of Nike Greater China, believes that Nike's market ecology in China "has not reached the expected level," and the online layout has become "too fragmented." Consumers expect a more high-end experience that aligns with brand positioning, is more credible, and connects online and offline. To put it bluntly, while the official statement emphasizes experience, **what Nike really wants to take back is the dominant right in the Chinese online market.** Among these, **the most urgent is pricing power.** For a long time, after Nike products entered the dealer system, the final transaction price was simultaneously affected by dealer inventory, platform promotions, and traffic competition, making it difficult for Nike to achieve complete unification. When inventory accumulates, dealers need to recover cash, and platforms compete for traffic, so discounts are naturally unavoidable. At the same time, frequent promotions have in turn changed consumers' purchasing habits. Kan Wei, founder of sports and lifestyle brand strategy consulting firm Conduit Asia, stated frankly, **without tightening online channels, consumers will keep waiting for discounts.** After Nike previously tightened promotional discounts, online full-price sales have shown improvement for two consecutive quarters. **Nike also needs a more unified brand narrative.** Different partners managing their own stores means that merchandise, content, and promotion rhythms are scattered across numerous online entry points. Nike finds it hard to guarantee that consumers see the same brand story in different stores. Specifically regarding China business, in recent years, domestic brands like Anta and Li-Ning have continuously squeezed Nike's market share, while international brands like On and HOKA are also growing rapidly. Nike's Greater China region has seen declines for eight consecutive quarters, with the most recent quarter showing a further 17% drop in revenue at constant exchange rates. **On the surface, taking back online sales rights from distributors seems to mean Nike is re-betting on DTC.** **But viewed within the context of global channel adjustments, Nike is not fully returning to direct operations.** In the 2026 fiscal year, Nike's global wholesale revenue grew by 4% at constant exchange rates, while NIKE Direct revenue decreased by 8%. The North American wholesale business is even expanding distribution and increasing supply to partners; Nike is rebuilding the wholesale relationships previously weakened. Even in the Chinese market, Nike has retained all offline partners, continuing to rely on distributors to operate stores, cover cities, and provide offline experiences. Nike's first partner-operated ACG store, managed by Topsports Facing the new rules drawn unilaterally by Nike, Topsports has almost no room for negotiation. Topsports Chairman Yu Wu stated that although the adjustment will bring short-term pressure, both sides will continue to cooperate. **This is also Topsports' most realistic choice at present.** In the long run, Topsports needs to reallocate the online resources originally serving Nike to cooperative brands like Adidas, Puma, and Asics, and continue to increase investment in niche markets such as running and outdoor activities. As of the end of February 2026, Topsports had 92.9 million cumulative users, operated over 700 short video accounts, more than 3,700 mini-program stores, and connected about 3,800 stores to instant retail. Whether these channels can translate into new growth depends on whether Topsports can find sufficiently strong brands and products. Exclusive operating brands like Norrøna, norda, Soar, and Ciele are also attempts by Topsports to extend into brand operations. But judging by current volume, they cannot fill the gap left by Nike in the short term. From this perspective, what Nike is reshaping in the Chinese market is **a channel system characterized by centralized online operations and collaborative offline presence.** Pricing, merchandise assortments, and brand expression are concentrated at the official level, while store coverage still relies on distributors. But with such a massive overhaul, can it truly reverse the continuous decline in China business? **Hard to Cure the Disease** According to GlobalData statistics, sports-related products have become the fastest-growing consumer category in China, with residents' enthusiasm for participating in sports and fitness reaching levels not seen in decades. Over the past five years, the size of China's sportswear market has grown by 51%. However, **under the wave of national fitness in China, Nike's business in China has fallen instead of rising.** In the 2021 fiscal year, Nike's Greater China revenue reached $8.29 billion, maintaining double-digit growth for seven consecutive years. By the 2026 fiscal year, revenue had shrunk to $5.847 billion, a contraction of about 30% over five years, and it has declined for eight consecutive quarters. Is poor performance caused by distributors? This view is inevitably one-sided. In the domestic sports goods market, **channel management has never had a fixed strategy of either-or.** Nike's direct competitors, Li-Ning, Anta, and Adidas, adopt vastly different channel strategies. In 2025, **Li-Ning's authorized distributor channel revenue reached 13.773 billion yuan, a year-on-year increase of 6.3%, accounting for 46.6% of total revenue.** Meanwhile, direct channel revenue actually decreased by 3.3%, with distributors remaining its primary sales channel. Anta, on the other hand, strengthened channel control through DTC. In 2025, the revenue shares for Anta's main brand DTC direct sales, DTC franchising, and e-commerce reached 35.4%, 18.4%, and 37% respectively, with traditional wholesale channels accounting for only 9.2%. Among them, DTC direct sales revenue grew by 5.9%, and e-commerce grew by 7.3%. Deep control over merchandise, prices, and terminals similarly supported Anta's revenue growth. If the growth of domestic brands were simply attributed to local advantages, then Adidas would be an exception. Adidas did not bet on a single channel. In 2025, its global wholesale business still accounted for 60% of revenue, and DTC accounted for 40%. The company explicitly emphasized maintaining channel balance among multi-brand retail, direct stores, and e-commerce. In 2025, Adidas's Greater China sales increased by 13% at constant exchange rates, marking the second consecutive year of double-digit growth. Similarly an international sports brand, Adidas is recovering growth. It is evident that **Nike's problem is not just a channel issue.** Once, Nike almost defined the Chinese sneaker market. Around 2019, popular shoe models like AJ sold out immediately upon listing, with secondary market premiums becoming the norm. Some AJ models with an initial release price of over 1,000 yuan could reach resale prices of several thousand yuan. But in recent years, sneaker hype has cooled, and it has become increasingly common for new Nike releases to break issue price or see price cuts. Facing chaotic pricing, Nike attempted to reshape product value by unifying online sales channels. But **if it still tries to solve today's problems using the logic of creating scarcity in the past, it is somewhat like carving a mark on a moving boat.** In the 2026 fiscal year, Nike's Greater China revenue decreased by 13% at constant exchange rates, wholesale revenue dropped by 14%, and direct revenue fell by 12%. Among them, sales from Nike's official digital channels decreased by 29%, a drop much higher than offline stores and wholesale channels. **Nike has taken back the online business from distributors, but the official digital channels responsible for undertaking this sales volume have not shown sufficient strength.** This is precisely the most risky aspect of this adjustment. Figure: Nike's self-operated store in Shanghai, Greater China Laurent Vasilescu, an analyst at BNP Paribas, believes that **the core issue Nike faces in China is not distribution, but product issues, and expects this adjustment may cause a sales loss of $500 million to $1 billion.** In fact, the so-called product problem, **at its core lies in Nike's local decision-making and product response failing to keep up with changes in the Chinese market.** The dividends from basketball shoes and trendy sneakers that previously supported its growth are gradually fading, and consumer demand is beginning to 分流 (divert) to more specific scenarios like professional running, outdoor activities, yoga, and training, yet Nike has been slow to establish new product matrix pillars. Nike itself clearly understands that merely tightening channels cannot save its China business. Aside from restructuring channels, the company established its first Greater China local product creation lead for the first time and plans to launch a lifestyle series led by the local team, hoping to improve product alignment with Chinese consumers. However, taking back channels can be done with a notice, but repairing product competitiveness has no shortcuts. From the current perspective, losing Nike's online sales rights hurts Topsports more obviously. But what Nike bears is the risk of betting on channel reconstruction amidst intensifying competition. At least for now, surrounded by wolves, Nike has not yet produced a sufficiently clear product answer. Source: Chaoyang Capital Theory ### Related Stocks - [06110.HK](https://longbridge.com/en/quote/06110.HK.md) - [NKE.US](https://longbridge.com/en/quote/NKE.US.md) - [03813.HK](https://longbridge.com/en/quote/03813.HK.md) - [ADS.DE](https://longbridge.com/en/quote/ADS.DE.md) - [ADDYY.US](https://longbridge.com/en/quote/ADDYY.US.md)