(Reuters) -Nike ( NKE ) reported a surprise drop in fourth-quarter revenue on Thursday, as the sportswear maker struggled with low demand for its apparel and footwear amid rising competition from brands such as On and Hoka.

Shares of the company fell 4.6% in extended trade.

Even though Nike ( NKE ) has outlined a plan to streamline its portfolio, analysts note that it would be some time before the sportswear company can revive demand as innovation and launches of new product lines take time.

Nike's ( NKE ) efforts to drive more sales through its direct-to-consumer channel have also taken a hit as customers turn more picky about their non-essential spending and look to spend their dollars on more fashionable and innovative brands such as On and Deckers' Hoka.

Nike ( NKE ) is also losing ground to rival Adidas' retro-style Gazelle and Samba sneakers, which have helped the European sportswear maker see a rebound in demand after its damaging break-up with rapper Ye.

The Air Jordan maker is also doubling down on wholesale partnerships after years of pulling back on distribution. Nike ( NKE ) executives in March acknowledged that their direct-to-consumer push was not driving growth and had instead led to a drop in its market share.

Fourth-quarter gross margin increased 110 basis points to 44.7%, primarily due to Nike's ( NKE ) plan to cut costs through layoffs and reduced supply of some of its underperforming products as well as lower ocean freight rates and logistics costs.

Nike's ( NKE ) net revenue fell 1.71% to $12.61 billion, compared with analysts' average estimate of a 0.13% rise to $12.84 billion, per LSEG data.

The company's net income for the reported quarter rose 45% to $1.50 billion, or 99 cents per share, compared with $1.03 billion a year earlier.

(Reporting by Juveria Tabassum and Ananya Mariam Rajesh in Bengaluru; Editing by Shinjini Ganguli)