Nike has warned that its profits will continue to be squeezed by the strong dollar and discounts aimed at cutting its stockpile of goods.

The sportswear giant, which makes over half of its revenue outside North America, doubled how much it thinks the soaring dollar will hit its annual revenue to $4bn (£3.6bn).

Meanwhile, the firm’s inventories rose more than 40% compared to a year ago.

After the announcement Nike shares fell by more than 9% in extended trading.

“Headwinds from foreign exchange shifted significantly in the last 90 days as the trend of US dollar strengthening has accelerated,” Nike’s finance chief Matthew Friend said.

In its quarterly update to investors, the company said net income fell to $1.5bn in the three months to the end of August, down 22% compared to a year ago.

The firm said profit margins had been hit by increased transport cots and higher markdowns.

At the same time overall inventories rose by 44% to $9.7bn as the amount of goods in transit increased due to supply chain issues.

However, the company reported that its revenues rose to $12.7bn for the same period, beating Wall Street forecasts.

Analysts said demand for Nike’s brands including Jordan and Converse had slowed as shoppers cut back on spending due to the cost-of-living crisis.

Rival sportwear maker Under Armour and major US retailers like Target have have also offered heavy discounts as their inventories rose in recent months.