Nike (NYSE:NKE) disclosed an 18% slide in fiscal second-quarter profits on Thursday amid slumping sales in China, but the apparel and sneaker maker’s earnings still topped forecasts from analysts.
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Shares of Nike, which have been stagnant for much of this year, turned about 3% higher on the stronger-than-expected numbers.
The company said it earned $384 million, or $1.14 a share, last quarter, compared with a profit of $469 million, or $1.05 a share, a year earlier. Analysts had been calling for EPS of $1.00.
Despite a double-digit decline in Greater China, overall revenue rose 7% to $5.96 billion, nearly matching the Street’s view of $5.99 billion. Excluding the impact of currency fluctuations, revenues would have climbed 10%.
However, gross margins shrank for the eighth quarter in a row, dropping to 42.5% last quarter from 42.8% the year before amid higher labor costs and unfavorable forex rates.
Nike said global futures orders, a closely-watched metric, climbed 6% year-over-year last quarter to $9.3 billion. Excluding currency changes, orders would be up 7%.
“Our strong second quarter results show that our growth strategies are working, even under challenging macroeconomic conditions,” CEO Mark Parker said in a statement.
Revenue in North America soared 17% to $2.42 billion last quarter, compared with a 2% dip in Western Europe to $897 million and a 2% gain in Central and Western Europe to $266 million.
Importantly, sales in Greater China dropped 11% to $577 million, highlighted by a 16% plunge in apparel revenue to $224 million. Sales in Japan rose 11% to $219 million.
Total selling and administrative expenses grew 6% to $1.84 billion. Nike said its inventories at quarter-end stood at $3.3 billion, up 9% from a year earlier.
Shares of Nike rallied 3.13% to $102.10 in extended action on Thursday, building on a 1.25% gain during regular trading.
The results came after Nike and Oregon reached a deal to keep the apparel company in the state. In exchange for a promise to calculate Nike’s state taxes the same way for 30 years, the company pledged to make a capital investment of at least $150 million and create a minimum of 500 new jobs in Oregon by 2016.