Nike Terminates Online Distribution Rights with China's Largest Dealer, Top Sports Shares Plunge 24%

Xiao Hao, a sneaker enthusiast from Hangzhou, China, discovered yesterday (22nd) morning on Top Sports' (06110-HK) mini-program that the Nike men's running shoe ZOOM FLY 6, originally priced at RMB 999, was listed at RMB 599.4. Additional discounts were also available, including a 5% discount for purchasing two or more items and another 5% for three or more.

He shared a screenshot with his sneaker friends, commenting, "Is Top Sports giving up?"

Unbeknownst to him, a bigger blow was coming. That same morning, a Hong Kong Stock Exchange filing revealed that Top Sports had received formal notice from Nike: effective January 1, 2027, its right to sell Nike products on online platforms in mainland China will be fully terminated.

According to Orange Daily News, this marks a turning point in the 27-year business relationship between Nike and Top Sports. On the day of the announcement, Top Sports' stock opened sharply lower, hitting a record low intraday, and closed down over 24%, with its market value dropping below HK$9 billion.

Top Sports' announcement disclosed that, based on management's preliminary estimate, Nike product online sales accounted for approximately 22% of the group's total revenue for the fiscal year ending February 28, 2026. The board expects the termination to have a significant negative impact on its business in the short term.

Another sports retailer, Prosperity International (03813-HK), also confirmed receiving notice from Nike yesterday. Market analysis estimates that Nike's online business contributes about 15% of Prosperity's total revenue. Prosperity's stock closed at HK$0.315 on the 22nd, down approximately 8.7%—a much smaller decline compared to Top Sports.

Analysts believe that Nike's online operations contribute less to Prosperity's profits, and that its parent company, Yue Yuen Industrial, is one of Nike's primary manufacturers, maintaining a long-term partnership in manufacturing.

Nike stated that this move continues its global selective distribution strategy in the Chinese market, aiming to provide consumers with a higher-quality, more consistent brand shopping experience.