Nike's ( NKE ) latest dreadful quarter just freaked out investors in other top sportswear stocks.

Shares of Nike rivals Lululemon ( LULU ), On ( ONON ), Under Armour ( UAA ), and Hoka maker Deckers Outdoor ( DECK ) all dropped in premarket trading on Friday. The pullbacks likely reflect two aspects of Nike's quarter and outlook.

For one, comments from Nike CEO Elliott Hill suggested that the weak sportswear market will continue in the medium term. That is causing Nike to discount slow-moving product, which could pressure others in the sector to do the same.

The company's earnings guidance for its full fiscal year was also well below analyst estimates.

"Nike Sportswear, which accounted for just under half of this quarter's revenue, was down low double digits," Hill said on an earnings call. "The decline reflected a combination of deliberate actions, product underperformance, and broader marketplace pressure. The first factor was one we expected. As planned, we reduced revenue from the Dunk by nearly 50% in the quarter. That resulted in roughly $200 million headwind in sportswear. In addition, some aged, higher-volume sportswear footwear sold through below expectations. Looking ahead, that has impacted our future order books as we proactively work with our wholesale partners to work through excess inventory to create a healthy marketplace."

The other factor at play is just Nike's raw results for the quarter. They are rough on the eye and probably have had investors in Nike competitors wondering if their companies are sitting on similar ugliness.

Nike Brand sales fell 4%. Online sales plunged 13%. Converse sales tanked 28%. China sales crashed 26%. And the company signaled a fresh round of major layoffs was coming.

Shares of Nike fell nearly 10% in premarket trading. Prior to the report, shares were down 76% in the past five years.

"We are not ready to call a bottom yet with shares trading at 28x P/E at the midpoint of FY27E guidance," Stifel analyst Peter McGoldrick said.

Brian Sozzi is Yahoo Finance's Executive Editor, host of the Sozzi Unleashed morning show, the ' Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi , Instagram , and LinkedIn . Tips on stories? Email brian.sozzi@yahoofinance.com.

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