As Nike writes a comeback story, fixing its China operations will be a crucial chapter on its path back to full strength in its overall business and stock price. The legendary brand has struggled globally to recover from a failed post-pandemic direct-to-consumer strategy under former CEO John Donahoe, who was ousted last year. Elliott Hill, a former longtime Nike executive, replaced Donahoe and started as CEO in mid-October 2024. Hill, 61, was hired to turn things around. He started at Nike as an intern in 1988 and rose through the ranks to president of consumer and marketing before his brief retirement in 2020. Since his return, Hill has centered his plans to revive Nike around the love of sports in the US and around the world. It won’t be easy. Nike stock has been in the doghouse since its record close of $177.51 each in early November 2021. Changes don’t happen overnight. By his own admission, Hill told CNBC in an interview broadcast Monday that “it’s going to take a while.” Speaking to CNBC’s Sara Eisen at the company’s headquarters in Beaverton, Oregon, Hill made it clear that China is high on his to-do list. “The difference in the China market versus the United States as an example is that it’s a single-brand store. The physical retail is just Nike, and I think we’re geared too much toward sportswear and not enough. Now, we’re reevaluating the concepts that we have in China,” Hill said. The master plan is to refocus on Nike’s connection to sports around the world, including China, the world’s second-largest economy, which has more than 1.4 billion people. Nike’s new direction is sports-themed stores. “We have a broker-run store that is starting to sell very well. [there] because it is anchored in sport. He has a point of view about sports. There are 5,000 [Nike stores in China]so it will take us time to implement those concepts, but we will feel good about the consumer-led and sports-led concepts there,” Hill told Eisen. Last week, after Nike delivered promising quarterly results that indicated progress in Hill’s turnaround, Jim Cramer acknowledged that Nike stock is on the right track. But he said the next leg up depends on China: “We won’t get there to $90 if you haven’t solved the China conundrum.” Nike’s sales in Greater China fell more than 9% to $1.51 billion in the latest quarter, but beat expectations. Sales in China in the quarter accounted for nearly 18% of Nike’s total revenue. On the post-earnings call, Hill attributed the decline in sales in China to “structural challenges in the market.” Other An obstacle for Nike in China is the tariffs imposed by the United States that make it more expensive to import goods manufactured there. Nike projects about $1.5 billion in related costs for fiscal 2026, up from an estimate of $1 billion three months earlier. “We now expect the net headwind in fiscal 2026 to increase from approximately 75 basis points to 120 basis points for gross margin,” said Chief Financial Officer Matt Friend on last week’s earnings conference call. In June, Friend outlined steps Nike has been taking to mitigate tariff pressures on profitability, including optimizing sourcing and production differently across countries; working with suppliers and retail partners to reduce costs; and implement an “increase in surgical prices in the United States.” In recent sessions, Nike stock has fell back to around $70 after rising 4.5% on October 1 following the results release the night before. However, in a show of confidence, we bought an additional 460 shares of Nike on that post-earnings bounce after initiating a position with 540 shares on September 26. The Club has a target price of $80. on Nike and a rating of 1 equivalent to buy. Mountain NKE 5Y Nike 5-year performance During the era Covid, Nike stock soared, benefiting from Donahoe’s digital vision that prioritized DTC sales over wholesale partnerships. In 2020, the first year of Donahoe’s tenure as CEO, Nike shares rose as much as 44%. A year later, he was breaking records. But from that point on, the stock fell steadily. since Donahoe’s plan failed once the pandemic stabilized and shoppers returned to shopping in stores. It’s been almost a year since Hill took the reins at Nike, and Wall Street is more hopeful. KeyBanc upgraded the stock last week to buy from hold. “There is enough visibility to feel comfortable in the broader turnaround story,” said the analysts, who set a $90 price target on Nike shares. They didn’t have PT previously. “While we recognize some [near-term] While turmoil remains due to tariffs, digital and China, we believe the sports offensive, innovation process and market resets will continue to best position Nike for a return to sustainable growth and margin recovery.” Jim agrees. “This guy, Elliott Hill. It’s about sports. “It’s competitive,” Jim said this week on “Squawk on the Street.” “He won’t lose because he has a great brand and they can come back.” While Hill emphasized that Nike’s turnaround will not be a success, the club is willing to wait for the ride. We are confident in Hill’s moves, which included senior leadership changes, restoring retail partnerships and launching his sports-focused “Win Now” strategy. (Jim Cramer’s Charitable Trust is long NKE. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim places a trade. 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