March 20 (Reuters) - Nike on Thursday forecast a steeper drop in fourth-quarter revenue than currently expected, with the leading shoe and sports apparel company striking a cautious tone as it works to rekindle interest among consumers who have defected to trendier rivals.

Shares dropped in after-hours trade following Nike's third-quarter earnings call, in which Chief Financial Officer Matthew Friend said he expects fourth-quarter revenue to decline in the mid-teens percentage range. That would be steeper than analyst expectations of a 12.22% decline to $11.07 billion, according to data compiled by LSEG.

Earlier, Nike reported third-quarter results that beat expectations on a promising consumer response to new shoe launches like the Pegasus Pro and Vomero 18. Shares of the Air Jordan maker rose immediately following the earnings report but then reversed course after the forecast to fall nearly 5% from $71.86 at the close.

The newly launched sneakers, fast-tracked by new CEO Elliott Hill, have performed well enough to give the sportswear maker some breathing room after several quarters of weak demand.

Friend said the fourth-quarter results will probably be hit hard as the company discounts old items in an effort to clear old inventory, and continues to rebuild relationships with retailers. But revenues "will begin to moderate" after the fourth quarter, Friend said.

Overall revenues were down 9% to $11.27 billion, with diluted earnings per share falling 30% to 54 cents. The results beat Wall Street expectations of an 11.5% revenue drop to $11.01 billion, and a 62.2% dive in earnings per share, according to data compiled by LSEG.

China remained a particular drag, with Nike posting a 17% drop in a region where demand suffers from concerns over job and wage security and a prolonged property slump.

"Sport is growing in China and we must accelerate our pace” there, Friend said on the earnings call.

Morningstar analyst David Swartz said that while overall results beat Wall Street expectations, "you can't ignore" the foreboding results in China.

Hill took the helm in October to lead a turnaround at a company that has lately struggled to design new, innovative shoes.

With rivals On and Hoka retaining their freshness in the eyes of consumers, analysts and investors heading into the quarter had anticipated that Nike's turnaround will take a few more quarters.

"I think the potential positive surprise here is that ... the new product is hitting the mark and that bodes well for the future launches," said Ramiz Chelat, portfolio manager at Vontobel, an investor in Nike.

In five months in the top job, Hill has stressed the need to turn Nike's focus back to its core business of sport and to repair its relationships with retailers, which suffered when ex-CEO John Donahoe shifted the company's focus to direct-to-consumer sales.

The quarter was marked by a boost in marketing and advertising efforts, the area "we knew could move quickest" to connect with consumers, Hill said on the call.

This year Nike ran its first Super Bowl ad in 27 years, featuring female stars like Caitlin Clark, key to the surge in popularity of the Women's National Basketball Association.

Nike still took a hit to revenues, due in large part to discounts on legacy franchises like Air Jordan 1, Air Force 1 and Dunk, as it looks to clear out old inventory and focus on innovation.

Gross margin fell 330 basis points to 41.5%, with Nike primarily attributing it to higher discounts, an excess of outdated inventory and increased product costs.