• Apple, Starbucks, Nike and LVMH are seeing falling China sales as the economy continues to falter.
• Tesla, as well as athleisure brands Adidas and Lululemon, are some of the rare companies still seeing a bright spot.

From Apple to Starbucks, U.S. consumer brands are reporting yet another quarter of China sales declines.

The falling revenue in what's been a major market for the U.S. companies comes amid tepid consumer spending in China and growing competition from homegrown brands.

Apple last week reported Greater China sales fell slightly to $15.03 billion in the three months ended Sept. 28, down from $15.08 billion in the year-ago period. The figures include sales from mainland China, Hong Kong, Macao and Taiwan.

CEO Tim Cook in an earnings call attributed the "flat" performance to improved foreign exchange and noted Kantar data that said Apple had the two top-selling smartphones in urban China.

The quarterly sales decline reduced Apple's China revenue share to 15.8% of total net sales, down from 16.9% in the year-ago period.

The iPhone maker's sales have come under pressure from Huawei's recovery in the Chinese smartphone market.

Stronger competition

Starbucks has faced even greater pressure from a surge in Chinese and foreign brands competing for the local market, often by selling coffee at half the price.

The U.S. coffee chain said its same-store sales in China dropped by 14% in the three months ended Sept. 29, with consumers spending on average 8% less per order.

The sales were "weighed down by intensified competition and a soft macro environment that impacted consumer spending," CEO Brian Niccol said on an earnings call last week, according to a FactSet transcript.

He said he needs to spend more time in China to understand the local business. "All indications show me the competitive environment is extreme, the macro environment is tough, and we need to figure out how we grow in the market now and into the future," Niccol said. "In the meantime, we continue to explore strategic partnerships that could help us grow in the long term."

China's share of Starbucks' revenue fell to 8.6% in the latest quarter, down from 9% in the year-ago period.

Low consumer confidence

U.S. sportswear giant Nike said that Greater China revenue for the quarter ended Aug. 31 fell by 4% year-on-year to $1.67 billion.

"Nike is not immune to the challenges with the consumer in Greater China today," CFO Matthew Friend told analysts on an Oct. 1 call, according to a FactSet transcript. He said retail sales missed the company's expectations and Nike has lowered China business forecasts for the rest of the year.

However, Nike's reliance on China for revenue increased. The region's share of total revenue rose to 14.4% in the quarter, up from 13.4% in the year-ago period.

In Europe, luxury giant LVMH also felt the drag from the China market. Asia revenue, ex-Japan, plunged by 16% year-on-year in the third quarter. That was far steeper than the 3% decline in revenue overall.

“Consumer confidence in mainland China today is back in line with the all-time low reached during COVID," CFO Jean-Jacques Guiony, said on Oct.16, according to a Refinitiv transcript.

Ex-Japan Asia sales for the first three quarters of the year fell to 29% of LVMH's total revenue, down from the 32% share reported for the same period in 2023.

Reliance on Chinese market

Apple, Starbucks and Nike have all seen the China market decline as a share of total revenue when compared to 2019, before the pandemic.

"What makes China relatively unique is partnerships and politics and how important that is and a company's ties to China," said Isaac Stone Fish, founder and CEO of the U.S.-based consultancy Strategy Risks.

The firm put out an analysis in late September of U.S. companies with the greatest degree of China exposure: Ford, Carrier, Apple, Tesla, Coca Cola, Cummins, RTX Corporation, Honeywell, Walt Disney and Caterpillar.

"It depends on how risk-averse investors are," Stone Fish said, "but people need to understand that there's a real possibility of increased tensions between the U.S. and China and even a potential Chinese invasion of Taiwan or a blockade that would upend global supply chains and really distort the market as it is today."

Bucking the slowdown

Elon Musk's Tesla still relies on China for more than one-fifth of its revenue. That share grew to 22.5% in the quarter ended Sept. 30 as the electric car company's sales in China climbed by nearly 13% year-on-year to $5.67 billion.

Tesla's Model Y was China's best-selling electric vehicle in September despite growing competition from local automakers.

Adidas' Greater China sales increased by 8.7% to 946 million euros ($1.03 billion). It made up 14.7% of the 6.44 billion euros in Adidas' total revenue for the quarter.

In an Oct. 29 earnings call, CEO Bjørn Gulden partly credited the stronger-than-expected growth in the third quarter to "strong underlying growth in Greater China" and said Adidas is creating China-developed and sourced products to compete locally. That's according to a Refinitiv transcript.

Lululemon, next set to report earnings Dec. 5, has also bucked the trend with its report this summer of a 34% surge in mainland China revenue for the quarter ended July 28. CFO Meghan Frank said in August that the company plans to open most of its new stores this year in mainland China.

Clarification: This story was updated to fix a second reference to Isaac Stone Fish.