Nike shares slide 8% as switch to newer styles to squeeze revenue

"What we heard on this quarterly call was that the merchandise margin recovery was coming slower largely due to management actions (reducing core product lines) and that sales through 1H25 would remain in negative territory," Barclays analyst Adrienne Yih said.

The brokerage cut its price target by a fifth to $114, the biggest on the Street after the results.

Investors also focused on executives' comments that Nike's years-long direct-to-consumer (DTC) strategy was not driving growth as expected. The world's largest sportswear maker is now looking to reengage with its wholesale partners.

"Nike's distribution strategy is all over the place. Problem is customers want to buy Nike everywhere so reducing wholesale dramatically seems like the wrong move in hindsight," Jefferies analyst Randal Konik wrote in a note.

Sluggish demand in North America has also weighed on the company's DTC efforts. Rival Lululemon Athletica flagged a hit to its annual revenue and profit on Thursday, citing waning demand mainly in the region. Its shares were down 14%.

Nike shares have lost 16% of their value over the last 12 months.

"Until the market sees evidence that new products can grow and scale sufficiently, we think this will remain a hotly-debated stock that will remain stuck in the mud," said Wedbush analyst Tom Nikic.

At least 12 brokerages cut their PTs on the stock following the results, pulling down the median target to $116 from $126 in December. Nike's shares were trading at $93.10.

Nike's forward price-to-earnings multiple, a common benchmark for valuing stocks, is 24.84, compared to 52.08 and 15.31 for Adidas and Puma, respectively.