Nike (NKE) shares surged 5.68% in after-hours trading on Thursday following the release of its fiscal fourth-quarter earnings report that topped analyst expectations despite ongoing challenges. The sportswear giant reported revenue of $11.1 billion, down 12% year-over-year but above the $10.72 billion analysts had forecast. Earnings per share came in at $0.14, edging past estimates of $0.13.

While sales declined across all geographic regions, with Greater China seeing the steepest drop of 21%, the results were better than feared given the company's ongoing turnaround efforts. Gross margin fell 440 basis points to 40.3% as Nike worked to clear excess inventory, which remained flat year-over-year at $7.5 billion. CEO Elliott Hill acknowledged that the financial results are "not where we want them to be" but expressed confidence that the business will improve as a result of the company's "Win Now" actions.

Nike has been grappling with increased competition, changing consumer preferences, and inventory challenges in recent quarters. Under Hill's leadership, the company has been heavily investing in product innovation, rekindling relationships with wholesale partners, and refocusing its marketing efforts around sports. These initiatives appear to be gaining traction, with analysts noting progress in inventory cleanup and new product launches.

Looking ahead, Nike expects headwinds to moderate in the coming quarters. The company forecast first-quarter revenue to be down mid-single digits compared to the prior year, slightly better than the 7.3% drop analysts were expecting. While challenges remain, particularly in China, investors seem optimistic about Nike's trajectory as it continues to execute its turnaround strategy.