TOPSPORTS denies Nike China online cut as 22% of revenue at risk

TOPSPORTS (06110.HK) said it received no official notice from Nike about terminating online distribution in China, after a rumor triggered unusual share price moves.

"Nike and the Group have been exploring various aspects of their business cooperation from time to time, including the status of its online sales arrangements," TOPSPORTS said in a filing to the Hong Kong stock exchange.

For the financial year ended Feb. 28, 2026, online sales of Nike products accounted for about 22% of TOPSPORTS total revenue. The company requested a trading halt on June 25 after unusual movements in its share price and trading volume. Trading will resume at 9 a.m. HKT on June 26.

The speculation, reported by Chinese media and cited by BNP Paribas, suggested Nike plans to terminate all first-tier online distributorship authorizations in mainland China starting Jan. 1, 2027. Such a move would mirror Nike's earlier direct-to-consumer push in Western markets, which opened shelf space for rivals including On and Hoka, BNP Paribas senior analyst Laurent Vasilescu said.

The clarification comes as Nike's China business faces headwinds. The sportswear giant reported a 10% revenue decline in Greater China in its fiscal second quarter, with online sales falling 21%. Nike President and Chief Executive Officer Elliott Hill said during an earnings call that the brand's China comeback is still in its early phase.

Vasilescu said he doesn't think Nike has a distributor problem but rather a product problem, which also applies in other markets. Nike's previous Consumer Direct Acceleration program, launched in June 2020, added complexity and inefficiency, leading to a $2 billion cost-savings restructuring by December 2023. The company later reinstated some wholesale partners it had cut.

TOPSPORTS is one of Nike's largest distributors in China, operating a network of retail outlets across the country. The company's reliance on Nike products makes any change to the distribution arrangement material to its business. Nike shares (NKE.US) have declined about 30% over the past year as the company grapples with slowing demand and increased competition from emerging athletic brands.

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