as Hill likes to frame it: China was still in the middle innings of its recovery. As a truly global operator, it is normal for growth to occur at differing rates, and the same applies when you are recovering from a slump. The results for China, where a Great Wall of unwanted inventory still hadn’t been fully dismantled, and stores were getting frumpy, weren’t expected to be great, and those expectations were fulfilled. Comparing progress in the different geographies, Hill said with some hyperbole, that “China has our longest road ahead”. Looking forward, CFO Matt Friend added that the results for China in the third fiscal quarter would be “relatively in line with what we’ve seen in Q2”. Hill, on China: “It’s clear that we need to reset our approach to the China marketplace.” He added a diagnosis: “Our growth will come through sport, but the reality is we’ve become a lifestyle brand competing on price”. He bemoaned the situation the brand found itself in, with stores that weren’t compelling and perpetual promotions to clean up inventory. The marketplace still needed a major clean-up, with improved visual presentation and merchandising. “It’s not happening at the pace we’d like”, he admitted. To be fair, Nike is also fighting against a nationalism headwind in China that has benefited domestic competitors like Anta and Li Ning. Apart from China, the picture was brighter. Year-on-year sales in Greater China were down by 17 per cent in the third quarter to US$1.4 billion, a steeper fall than in the first. Footwear in the region was down by 21 per cent and apparel by 6 per cent. Earnings before interest and taxes (EBIT) contributed by the China business were about halved to US$191 million. The broader picture for the company was much brighter. During the quarter, Nike’s overall global revenues rose by 1 per cent to US$12.4 billion. Revenues for North America grew by an encouraging 9 per cent, and in Europe, the Middle East and Africa by 3 per cent. In Asia, the Pacific and Latin America, revenues were down by 4 per cent. Company-wide gross margin fell by 300 basis points to 40.6 per cent, hampered by tariff cost increases and the ongoing ruthless inventory correction in wholesale, particularly. Marketing expenses rose by 13 per cent, with the company investing heavily in associations with major sports events, including basketball, tennis, running (most notably the Chicago Marathon and the attempt in Paris to break the first sub-four-minute mile by a female), football, Special Olympics, and baseball. Offsetting this ramp-up in marketing costs was a 4% fall in operating overheads, keeping overall selling, general and administrative expenses level with last year. Net income came in at $792 million, down 32 per cent from a year ago. Lululemon: strong in China, weaker in North America Nike’s report came hard on the heels of global athleisure brand Lululemon’s report for its third fiscal quarter of 2025, ending October 27. Lululemon, which overlaps with Nike in active apparel, also has a large stake in the Chinese market, its second-largest after North America. For the quarter, Lululemon reported 46 per cent revenue growth in Mainland China, with same-store sales growth of 24 per cent. The company leadership expects the same momentum to carry through the remainder of the year. CFO Meghan Frank told investors that the strong result was partly attributable to a stronger-than-expected response to the company’s outerwear assortment and to an earlier start to Singles’ Day (November 11, or 11/11 Day) on the Lululemon e-commerce site. CEO McDonald added that the brand was performing strongly and gaining share across “all tier cities” in China. Trade impacts The tariff impact and the removal of the de minimis rule were writ large on company sales in the US, gross margin, and the bottom line. The problem is not just that source countries for most of Lululemon’s apparel have been hit with higher tariffs in the United States. Most company e-commerce sales to US customers are fulfilled from Canadian distribution centres, and these no longer benefit from the discontinued de minimis exemption from customs duty for small orders. Although the company wants to maintain its presence in its native Canada, there will be some tinkering of the supply chain going forward. Global revenues fell by 3 per cent in the US and by 1 per cent in Canada, but elsewhere, including China, they rose strongly by 33 per cent. Worldwide, company revenues grew 7 per cent to US$2.6 billion. Gross profit margin declined by 290 basis points to 55.6 per cent, due to the trifecta of tariff impact, markdowns, and adverse foreign exchange movements. The company estimates that the tariff effect alone will reduce operating income by US$210 million in fiscal 2025. Net income for the quarter was $306.8 million, a 13 per cent decrease. CFO Frank also warned that sales momentum in North America had softened a little since Thanksgiving. Lululemon ended the quarter with 796 stores worldwide, including 47 net new store openings over the past 12 months. Calvin McDonald is stepping down as CEO at the end of the fiscal year on January 31 amid the company’s indifferent results in North America and a stock price that has been running in the mud, or instead sinking in it, losing 44 per cent of its value by Christmas week. Further reading: Can a new CEO make Lululemon cool again?