Drew Angerer Nike (NYSE:NKE) rallied in postmarket trading on Tuesday after sliding past consensus marks with its FQ2 earnings report. A drop in revenue in Greater China (-3%) was more than offset by gains in Asia Pacific & Latin America (+19%), North America (+30%) and Europe, Middle East, & Africa (+11%) . Footwear sales were up 25% to $8.50B, while apparel sales rose 4% to $3.8B. Nike Direct sales were up 16% to $5.4B on a reported basis and were up 25% on a currency-neutral basis. Converse sales growth lagged during the quarter with only a 5% increase. Gross margin fell 300 basis points to 42.9% of sales vs. 42.1% agreed. The margin drop was primarily due to higher markdowns to liquidate inventory, particularly in North America, as well as continued unfavorable swings of foreign currency exchange rates and elevated freight/logistics costs. Strategic pricing actions during the quarter helped offset some costs. Net income for the apparel giant was flat compared to a year ago at $1.3B. Nike (NKE) ended the quarter with inventory up 43% year-over-year to $9.3B compared to the prior year. The comparable to last year when supply chain disruptions hit accounted for in part for the big runup. Nike’s (NKE) cash position at the end of the quarter was $10.6B vs. $15.1B a year ago as strong free cash flow was offset by share repurchases and cash dividends. Nike (NKE) management said the company is on track to deliver on operational and financial goals. The athletic apparel giant is expected to issue guidance on its upcoming conference call. Shares of Nike (NKE) rose 3.86% in after-hours trading to after falling around 6% in the week ahead of the earnings report. NKE typically guides during the earnings conference call. Companies that have a very high trading correlation with Nike include Under Armour (UAA), Foot Locker (FL), Skechers (SKX), Lululemon (LULU), as well as Starbucks (SBUX) due to the China connection.