S&P cuts Nike rating to A amid cash burn and China slump

S&P Global Ratings lowered Nike's credit rating to 'A' from 'A+' on October 5, 2026. The agency cited a prolonged turnaround in key lifestyle segments and sharp top-line deterioration in Greater China, warning that the company faces negative cash flow generation over the next two to three years.

S&P expects Nike's consolidated revenue to contract by more than 7% in fiscal 2027 and weaken further in fiscal 2028. This drop is compounded by an incremental $1 billion in restructuring charges for a corporate overhaul. In Greater China, revenue plunged 26% in the first fiscal quarter and is projected to fall approximately 30% for the full fiscal year. The market once generated more than a fifth of total sales, but now faces pressure from domestic rivals like Anta Sports. In response, Nike plans to reclaim direct digital channels in early 2027 and re-engage wholesale partners.

Outside Asia, Nike faces changing consumer demand in its core lifestyle and Jordan franchises, which make up over 60% of total revenue. Although performance lines under the Sport Offense strategy grew in the high single digits, specialized brands like On and Hoka continue to cap broader momentum.

Nike retains an $11.4 billion liquidity cushion to absorb an estimated $1.2 billion annual cash burn after dividends. S&P expects the company to suspend share buybacks, scale back capital spending, and rely on cash reserves for debt maturities through early 2027. S&P assigned a negative outlook, warning of potential cuts over the next 12 to 24 months if Nike cannot maintain its adjusted free operating cash flow-to-debt ratio above 25%.