Nike Inc reported second-quarter fiscal 2024 revenue of $12.4 billion, including $1.7 billion from the Chinese market.

While Nike's fiscal second-quarter global revenue fell 8 percent compared to the prior year, the results still exceeded analysts' expectations in the first earnings report under new CEO Elliott Hill, who returned to the company in October. Net income also slid 26 percent to $1.2 billion.

Highlighting the company's renewed focus on sports, Hill said: "We're taking immediate action to reposition our business...Moving forward, we will put athletes at the center of every decision and leverage deep athlete insights to accelerate innovation, design, and storytelling."

Hill said at the earnings call that the company remains optimistic about the long-term potential of the Chinese market and aims to inspire more Chinese consumers to embrace sports.

"Nike is increasing its investment in product innovation in China, supported by our local product development teams and the establishment of a sports research lab dedicated to studying Chinese consumers. Additionally, we are working with local partners to enhance consumer-focused services and experiences," he said.

In the Chinese market, Nike's second-quarter revenue dropped 11 percent to $1.7 billion, with direct revenues down 7 percent. Nike digital saw a 4 percent decline, while Nike stores and wholesale revenues fell by 8 percent and 15 percent, respectively.

CFO Matthew Friend attributed these challenges to higher markdown activity aimed at driving inventory sell-through, which negatively impacted gross margins.

Despite the decline, Nike reported positive results in specific areas. The Pegasus 41 led sales in women's running, and new ACG apparel gained significant social media attention, said the company.

Locally designed Express Lane products also saw robust demand at full price, driving higher margins. Nike's engagement with the Chinese market included high-profile events such as hosting marathoner Eliud Kipchoge during the Shanghai Marathon, which saw participation from over 250,000 runners.

Kipchoge's visit included school outreach and a run along the Great Wall to inspire young athletes. Tennis star Zheng Qinwen also connected with fans in Beijing, supported by the launch of the Nike Air Zoom Vapor to celebrate her Olympic victory.

Additionally, the company hosted the Nike National University Street Dance Competition in December, featuring over 5,500 dancers from 240 school clubs across 50 cities.

Friend said Nike is committed to addressing current challenges, strengthening brand momentum, and fostering a sustainable marketplace in China.
"While near-term conditions are challenging, sport continues to grow in China," Friend said.