06:26 AM EDT, 03/22/2024 (MT Newswires) -- Nike ( NKE ) shares fell early Friday after outlining expectations for its revenue to decline in the first half of fiscal 2025, as the athletic footwear and apparel maker continues its cost savings initiatives.

The company is "prudently planning" for sales to be down by low-single-digits for the first six months of its following fiscal year, Chief Financial Officer Matthew Friend said during a late Thursday conference call to discuss results for the third quarter of fiscal 2024, according to a Capital IQ transcript. Shares of the maker of Air Max, Air Jordans, and other sports shoes and accessories fell more than 6% in premarket trading.

The guidance "reflects near-term headwinds from life cycle management of our key product franchises, more than offsetting the scaling of new products as we shift our product portfolio toward newness and innovation," according to Friend. "This also continues to reflect the subdued macro outlook around the world."

Nike ( NKE ) anticipates fiscal 2025 revenue and earnings to grow on an annual basis with operating margins expanding, excluding the impact of the restructuring charges in fiscal 2024, Friend said on the call. In December, the sporting goods giant outlined plans to cut costs by up to $2 billion over the next three years, including simplifying its product assortment, increasing automation and streamlining the organization.

The company expects the first half of fiscal 2025 to be a transition period as they scale new innovations and simultaneously pull back on legacy franchises, Wedbush Securities said in a client note. The pullback is expected to impact its digital channel more than wholesale, resulting in channel mix headwinds, analysts Tom Nikic and Matt Quigley wrote.

For the quarter ended Feb. 29, Nike ( NKE ) reported earnings of $0.77 per share, down from $0.79 the year before, topping the Capital IQ-polled consensus of $0.71. Excluding restructuring charges of $0.21 a share, EPS came in at $0.98. Revenue edged higher to $12.43 billion from $12.39 billion, ahead of the Street's view for nearly $12.3 billion.

Revenue for the Nike brand increased 2% to $11.95 billion, driven by gains in footwear and equipment. North American sales added 3%, while Europe, the Middle East and Africa reported a 3% decline. China logged revenue growth of 5% while Asia Pacific and Latin America gained 3%.

Gross margin improved 150 basis points year over year to 44.8% in the quarter due to pricing actions and lower ocean freight and logistics costs, partially offset by higher product input costs and restructuring charges.

Revenue for the current quarter is set to be "up slightly," compared with prior expectations for a low-single-digit increase, "reflecting some shipment timing benefits in (the third quarter) and lower digital growth due to franchise life cycle management," Friend told analysts. Foreign exchange is estimated to be a 1% headwind to sales.

"As we look forward, we are driving earnings growth and offsetting softer second half revenue with strong gross margin execution, disciplined cost controls, and healthy and more productive inventory levels across the marketplace," the CFO said. "Excluding restructuring charges, we expect to deliver on the full year earnings outlook that we communicated at the beginning of this fiscal year."

Price: 94.65, Change: -6.17, Percent Change: -6.12