Investing.com -- Nike (NYSE:NKE) reported Thursday better-than-expected fiscal third-quarter results as improved margins and strength in its North America segment boosted performance, but the sportswear giant's shares fell Friday after it forecast a drop in sales in its first half.
At 10:10 ET (14:10 GMT), Nike stock fell 8.4% to $92.16, resulting in year-to-date losses of over 13%.
The world's largest sportswear maker warned that its revenue in the first half of fiscal 2025 would shrink by a low single-digit percentages, as it replaces older styles with trendier sneakers in its fight for market share with newer brands.
RBC Capital Markets downgraded its investment stance on the retailer, cutting to 'sector perform' from 'outperform', and trimming its 12-month price target to $100 from $110.
"We have no doubt Nike will emerge on the other side a better company in a better phase of its business cycle; however, for now we prefer to follow the momentum, which we believe is stronger at Adidas (ETR:ADSGN)," analysts at RBC, in a note dated March 22.
.Jefferies has also cut its 12-month price target to $100, from $110, while maintaining a 'hold' rating.
"Nike is at a point of transition. The innovation flywheel has slowed and mgmt acknowledged the need to reaccelerate newness," analysts at Jefferies said, in a noted dated March 22.
"Many leadership changes have taken place to improve speed/productivity but will take time to bear fruit."
For the quarter ended Feb. 29, Nike reported adjusted earnings per share of $0.98 on revenue of $12.43 billion. Analysts polled by Investing.com anticipated EPS of $0.76 on revenue of $12.27B.
Sales in North America were up 18% for Q3 year-on-year, while in China, a key market for the company, sales gained 3%, offsetting a 6% decline in its Europe, Middle East & Africa segment.
Gross margin increased 150 basis points to 44.8%, driven price hikes and lower ocean freight and logistics costs.
(Yasin Ebrahim contributed to this article.)