Nike (NKE) has dominated the global footwear market for decades, delivering strong returns for shareholders as it continued to maintain its dominant market position. 

Unfortunately, the company’s performance has dragged over the past few years. After delivering a Uniform ROA of 25% in 2024, returns have dipped significantly to just 16% last year.

Moreover, Nike continues to lose market share to both established rivals like Adidas and upstarts like On and Hoka.

It has been two years since the company initiated its turnaround. But those efforts have yet to pay off, painting a pessimistic outlook for the shoemaker moving forward.

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“One billion people, two billion feet”, as Phil Knight once quoted, encapsulates Nike’s (NKE) rapid expansion into China and its reliance on the Chinese market for a significant portion of its global sales.

China became one of Nike’s most important markets in 2010, positioning it to benefit from China’s rapid economic expansion. 

That year, the shoemaker generated roughly $2.7 billion in revenue from the Greater China region. By 2020, revenue soared to $8.2 billion before declining to $6.5 billion in 2025.

Years of declining sales indicate that Nike’s historically lucrative China market is starting to dry up. 

Nike has seen its Chinese sales drop due to a combination of growing competition and a weakening consumer.

Nike’s revenue growth over the past five years has stalled, growing 1% annually. Meanwhile, longtime competitor Adidas has managed to grow by 6% and shoemaking upstart On has grown 48%.

As a result, Nike’s global market share has dropped from nearly 24% in 2016 to barely 19% today. After dominating the footwear space for decades, Nike’s grip on the industry is slipping. 

On top of those competitive pressures are macroeconomic problems like inflation, surging fuel prices, and tariffs—all of which have added pressure to an already-strained American economy.

Those competitive and macro trends have manifested themselves in Nike’s latest quarter. 

Even though the shoemaker managed to beat revenue expectations—revenue of $10.97 billion versus estimates of  $10.85 billion—those results still represented a 1% year-over-year decline. Sales in the Chinese market alone fell 12%.

Shareholders have taken notice of Nike’s decline.

The company’s stock price has fallen over the past five years from a peak of around $170 in 2021 to just $41 today.

Nike’s latest quarter shows that its turnaround efforts—which CEO Elliott Hill began in 2024—has yet to pay off.

And that stark reality isn’t lost on investors who expect returns to dip further for the shoe company.

To get a sense of what investors are thinking, we turn to our Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In other words, the EEA shows how well a company has to perform in the future to be worth what the market is paying for it today.

Nike has enjoyed above-average returns over the past several years. At one instance, its Uniform return on assets (“ROA”) peaked at 32%. However they have slid in recent years to just 16% in 2025.

With the company’s recent struggles in mind, investors now expect returns to keep falling to just 13% Uniform ROA by 2030, well below Nike’s peak and historical levels of performance.