Nike and Foot Locker's stocks decline after the athletic apparel company lowers its revenue forecast.

• Shares of both Nike and Foot Locker plunged Friday.
• Nike slashed its revenue outlook and announced $2 billion in cost cuts.
• Foot Locker stores depend heavily on Nike merchandise.

The athletic apparel maker cut its revenue outlook for the fiscal year, causing shares to plummet on Friday. Additionally, the sneaker retailer was affected by this news.

Nearly 4% of Foot Locker's revenue comes from Nike products, which closed down more than 11%.

Since Sept. 30, 2022, Nike has not had a worse day than the one it experienced on that date, which saw it decline by 12.8%.

Nike reported on Thursday that it now anticipates a 1% increase in revenue for the fiscal year, which is lower than its previous projection of mid-single-digit growth. Additionally, the company announced plans to reduce costs by over $2 billion in the next three years.

Matthew Friend, the finance chief, stated in the earnings call on Thursday that the new outlook reflects increased headwinds, particularly in Greater China and EMEA. He also pointed out digital traffic softness and a stronger U.S. dollar that has negatively impacted second-half reported revenue versus 90 days ago.

TD Cowen analysts stated in a Friday note that Nike's marketing outside of basketball, streetwear, and lifestyle trends needs improvement. They downgraded the stock from outperform to market perform, citing that innovation at the higher end of its assortment is not resonating at scale and that Nike is facing disruption from smaller competitors in footwear and apparel.

Goldman Sachs analysts stuck with their buy rating on Nike’s stock.

The company's report was acknowledged by them, as it provided enough evidence for bears to criticize the slowing growth momentum due to a challenging macroeconomic environment, which resulted in a more competitive marketplace. Additionally, the company's focus on key franchise life cycle management will negatively impact sales momentum in the future.