Shares of Nike Inc plunged 9% in premarket trading Friday after the world's largest sportswear maker warned of tighter margins as it deals with the relentless strengthening of the dollar and markdowns to clear ballooning inventory.

Nike expects full-year gross margin to fall 200-250 basis points after its total inventories surged 44% to $9.7 billion at the end of the first quarter.

The company, which gets more than half its revenue from outside North America, doubled its estimates for a hit to annual revenue from the soaring dollar to $4 billion.

Shares fell to $86.40. If losses hold through the session, it would be Nike's biggest one-day percentage fall since March 2020 and shave off about $13.5 billion in market value.

"The key debate is set to be around the likely pressure on gross margins for other companies as the industry follows the market leader's stepped up mark-down efforts and helps mop-up excess inventories," Jefferies analysts wrote in a note.

Shares of smaller rival Under Armour slipped 7.1%, while those of German peers Adidas and Puma skid 4.0% and 5.2%, respectively.

Slowing demand for Nike brands including Jordan and Converse is the latest evidence of consumers paring back on discretionary spending as they battle decades high inflation.

Some analysts, however, view Nike's inventory issues as a near-term problem, and are reiterating their bullish view on its shares.

"Nike's stock pullback represents a solid opportunity to own the highest quality name in the group," Credit Suisse wrote in a note.

The average rating of 36 brokerages covering the stock is "buy" and the median price target on the company is $115, down from $130 a month ago.