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STORY: Nike had a warning for investors late on Thursday (March 21).

The sportswear giant said revenue in the first half of fiscal 2025 would shrink by a low single-digit percentage.

It comes as Nike prepares to scale back on franchises to save costs.

The warning came after the stock market closed, and shares were down about 6% in extended trading.

Executives noted Nike's direct-to-consumer strategy was not driving growth as expected.

They also acknowledged Nike was losing ground in the running category.

It has faced competition from newer brands producing innovative performance shoes like On Running's Cloudflow 4 and Hoka's Clifton 9.

In December, Nike outlined a $2 billion savings plan.

It 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 the company was cutting back on orders of "classic" shoes.

That as it moved its focus to upcoming launches and developing new products.

Nike did beat Wall Street estimates for third-quarter revenue and profit.

It was helped by holiday season discounts and new sneaker launches.

Nike CEO John Donahoe promised investors the company would debut more new running sneakers this year.

The company kept its fiscal 2024 revenue forecast of a 1% growth.