By Scott Rubin, Benzinga Staff Writer

Global athletic apparel retailer Nike (NKE) continued strong operational momentum in its fiscal second quarter, reporting profit of $469 million, or $1 per share, up from $457 million, or 94 cents a share, in last year's second quarter.

The results beat Wall Street analyst estimates of 97 cents a share. The company cited strong consumer demand, expense leverage and a lower average share count in driving the strong results.

Net sales for the second quarter came in at $5.73 billion from $4.84 billion a year earlier. This also beat analysts' consensus estimates of $5.63 billion. Future orders at the Beaverton, Ore. company rose 13% year-over-year.

But despite the overall upbeat report, gross margins at Nike fell from 45.3% a year earlier to 42.7% in the most recent quarter. This is a metric that investors will want to continue to pay attention to going forward.

Still, investors were pleased with the results, sending Nike shares up 2.5% in after-hours trading to $95.95.

The Nike portfolio is "a powerful engine for growth," said CEO Mark Parker in a statement Tuesday. "Going forward we'll continue to use the unique power of our portfolio to drive growth, manage risk and connect with consumers."

Despite the beat, Nike's stock has done little over the course of the year, and it looks as though it will close 2011 nearly unchanged from the start of the year. Long-term shareholders of Nike may take solace in the fact that the company has managed to beat expectations, but may be disappointed by the lack of growth. However, all things considered, Nike's stock has been roughly in line with the broader performance of the market.

While investors may be concerned about declining margins, the company has once again underscored its solid growth profile and dominant position in the global athletic apparel market. In the last three months, Nike shares have risen 4.66% and are roughly $3 below all-time high prices.

The company's second-quarter results will likely do little to discourage investors going forward, but they also may not be enough to appreciably move shares higher in the near-term without a rally in the broader market.

ACTION ITEMS:

Bullish:
Traders who like Nike may consider the following trades:

• Go long Nike. The stock is up only 1.5% in after hours trading. Should the company continue to deliver, investors could still find that the stock is at an attractive valuation.

• Go long a Nike distributor, such as Foot Locker (FL). Better product could translate into a positive for the retailer.

• Buy puts on Nike. If the stock pulls back, puts could be an attractive way to play the downside to the stock.

• Take a position in another company in the footwear industry.