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 (TSX:RY) 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.)