March 21 (Reuters) - Nike ( NKE ) warned on Thursday

that its revenue in the first half of fiscal 2025 would shrink

by a low single-digit percentage as the world's largest

sportswear maker scales back on franchises to save costs.

Nike's ( NKE ) warning came after the stock market closed, and

shares were down 5.6% in extended trading. Executives

acknowledged that Nike's ( NKE ) direct-to-consumer strategy was not

driving growth as expected and that it was losing ground in the

running category.

In December, Nike ( NKE ) outlined a $2 billion savings plan, which

included reducing the supply of underperforming products and

improving its supply chain.

In a post-results call on Thursday, Nike CFO Matthew Friend

told investors that the company was cutting back on orders of

"classic" shoes such as the Air Force 1, as well as current

Pegasus Running shoes, as it shifted its focus to upcoming

launches and developing new products.

"It's not just about a product or an item here and there --

it's about building a robust pipeline of innovation," CEO John

Donahoe said on the call.

Nike ( NKE ) beat Wall Street estimates for third-quarter revenue

and profit on the back of holiday season discounts and new

sneaker launches, including the Ultrafly trail running shoe,

which it views as a way draw back customers amid rising

competition from brands such as On and Decker's Hoka

.

Donahoe promised investors that the company would be

debuting additional new running sneakers this year, including

shoes for "everyday runners" that incorporate the retailer's

Nike Air cushioning.

The company maintained its fiscal 2024 revenue forecast

of a 1% growth.

Newer brands have been taking away market share from Nike ( NKE )

thanks to innovative performance shoes such as On Running's

Cloudflow 4 and Hoka's Clifton 9 and Bondi 8, which have thick

foam soles that are resonating with customers.

Nike ( NKE ) reported a 3% jump in North America, its largest

market, and a 5% rise in Greater China, as heavy promotions on

its Jordan shoes attracted customers during the all-important

shopping season.

The company's quarterly profit of 77 cents per share topped

estimates of 74 cents on the back of job cuts and its cost

savings plan.

Nike ( NKE ) said revenue rose 0.3% to $12.43 billion, beating LSEG

estimates of $12.28 billion.

"There's nothing here that shows there is anything unusual

in the quarter...as far as what this means for the company's

turnaround...it doesn't mean much because the company is in a

restructuring situation but it's really only started," said

David Swartz, analyst at Morningstar.