Nike Inc. (NKE) reported strong fiscal 2010 third quarter results with a net income of $496 million or $1.01 per share compared to $244 million or $0.50 in the year-earlier quarter. The earnings also surpassed the Zacks Consensus Estimate of $0.89.

Despite a challenging macroeconomic environment, total revenues increased 7% during the quarter to $4.7 billion, compared to $4.4 billion in the year-ago period. Nike has consistently focused on innovative products that provide a competitive edge over its rivals.

Revenue increased across most of the geographic regions, except Central and Eastern Europe and Japan, where revenue decreased 8% and 7% year-over-year, respectively.

Gross margin during the quarter improved to 46.9% from 43.9% in the year-ago quarter. The increase in gross margins was primarily due to improved in-line product margins, reduction in discounted close-out sales and favorable changes in product mix. Global inventories declined 13% year-over-year to $2.2 billion due to prudent inventory management policies and alignment of merchandise mix in accordance with sales trends.

During the quarter, Nike repurchased over 5.1 million shares for approximately $329 million, which concluded its four-year $3 billion share repurchase program announced in 2006. Nike had repurchased 53.9 million shares under this program.

About 3.7 million shares repurchased during the quarter (for approximately $239 million) were part of a four-year $5 billion share repurchase program approved in Sept 2008. Cash and short-term investments totaled $4 billion at quarter end – about 55% higher than the year-earlier quarter.

Nike reported an increase in future orders scheduled for delivery from March through July 2010, which improved 9% year-over-year to $7.1 billion. Future orders measure customer orders scheduled for delivery in the coming season and are a widely used metric to gauge the performance of retailers.

Nike remained upbeat about its performance in the coming quarters with the World Cup soccer around the corner. The company stressed that it was gradually gaining market share across all the product categories. The strong quarterly results further boosted Nike’s shares by approximately 3.5% to $73.35 in after-hours trading after closing at $70.88 on the New York Stock Exchange.

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