'Three dangerous parts' to Nike's warning -George Ball

STORY: Shares of Nike hit 2-1/2 year lows on Friday and rattled those of other athletic gear makers, after the company's warning of a margin squeeze from widespread markdowns sparked worries of sector-wide contagion of ballooning inventory.

The world's largest sportswear maker on Thursday became the latest in a line of consumer brands and retailers to underscore the pressure on margins from ramped up discounts, as companies rush to get rid of excess inventory amid slowing demand.

Shares of Under Armour slipped 7.3%, while those of German peers Adidas and Puma 5% and 8.3%, respectively.

Retail chains Dick's Sporting Goods and Foot Locker dropped 7.2% and 3.2%, respectively, with Lululemon Athletica tumbling nearly 6%.