Nike has said it expects a surprise 10% drop in quarterly revenue, as it faces growing competition from newer rivals such as On and Hoka.

The news sent Nike shares plunging more than 12% in after hours trading, which could mean a loss of $15bn in market value if the losses hold on Friday.

The world's largest sportswear company also told investors it is facing weakening demand in international markets, including in China.

But Nike is optimistic that new products and a marketing campaign at the upcoming Olympic Games in Paris will help the company regain momentum with consumers.

"The Paris Olympics offers us a pinnacle moment to communicate our vision of sport to the world," CEO John Donahoe said on the earnings call.

The company also lowered its outlook for the 2025 fiscal year.

It said direct-to-consumer business declined 8%, as some customers went for more trendy upstart brands.

"There's a sense that Nike just hasn't innovated enough, it hasn't marketed enough, it hasn't told enough stories around its products," the Managing director of GlobalData Retail, Neil Saunders, told the BBC.

The sportswear giant's strategy to sell its products through its own stores and website instead of wholesales like Foot Locker hurt sales, Reuters said.

"Nike needs to get on the front foot again in terms of persuading people to buy its products," Mr Saunders added.

Nike is currently the top sponsor of jerseys at the UEFA Euro 2024 football tournament, beating out brands like Adidas and Puma.

They are sponsoring nine national teams including England, France and Portugal.