Nike's prospects look dim as China business continues to remain an area of concern

Following the company's warning that sales will drop this quarter due to ongoing problems in China and with the Converse brand, Nike Inc.'s stock fell.

After two consecutive periods of growth, the largest sportswear firm in the world anticipates revenue to drop in the low single digits during the three months that began on December 1.

Even while Nike is improving, particularly in North America and the running category, investors want the corporation to advance in other areas of the business where it is underperforming. In the most recent quarter, Converse sales fell 30%, while Greater China saw a 17% decline.

In extended trading in New York, the shares dropped by almost 11% at 6:35 p.m. As of Thursday's close, the stock had gone down 13% so far this year and is on track for its fourth yearly decrease.

Nike struggled to sell off older inventory and reported a decline in shop traffic in the Greater China region. As it refines its product line, the firm is currently concentrating on Beijing and Shanghai.

Read Also: Trump moves to ease US marijuana regulations, sparking industry hopes

Converse, which has long relied on the Chuck Taylor sneaker to boost sales, is another company that Nike is trying to revitalise. In other places, the brand has had trouble creating buzz.

Nike highlighted that it is still making progress in North America and in the running category.

In the fiscal quarter that concluded on November 30, overall sales increased by 1% to $12.4 billion, above the average of analyst projections.

By focusing too much on selling lifestyle trainers rather than creating equipment that appeals to athletes, Nike has lost fans in recent years. Nike has lost market share to competitors like Hoka and On in sectors like running. In order to focus on its own sales channels, Nike withdrew from wholesale partners at the same time.

Hill is now pressuring executives and designers to produce cutting-edge goods fast.

However, the company has not yet released longer-term guidance, which indicates that it is still gaining control of operations as it strengthens its focus on important sports and cities and rebuilds relationships with retailers.