By Alexandria Sage

SAN FRANCISCO (Reuters) - Nike Inc (NKE.N) posted a return to sales and profit growth on Wednesday 17 March and forecast higher expected orders around the world after a year of declines, sending its shares up more than 3 percent.

The largest global sports gear maker beat Wall Street expectations in its third quarter, fueled by fueled by fatter profit margins, supply chain improvements and improved demand around the world, especially in the United States and China.

Nike has been struggling to offset revenue declines in mature markets and even fast-growing young markets, as consumers slash discretionary spending in a downturn, with deep cost cuts.

But analysts say the latest results, as well as an estimate for growth in orders this fiscal quarter, pointed to a revival of topline and bottomline growth.

"We're more than a survivor in these tough economic times, said Chief Executive Mark Parker, citing market share gains, the company's tight supply chain and improvement in product, especially in its previously underperforming apparel unit.

"I think what you (will) see in the third quarter is the profit and balance sheet implications of running a tight supply chain," Chief Financial Officer Don Blair told analysts on a conference call.

Executives said the company had still not reached its full potential.

"We have not yet reached our normal revenue and profit growth trajectory," Blair said, adding fourth-quarter revenue would rise in the mid- to high-single digits on a percentage basis.

Nike posted a 6 percent gain on a constant currency basis in futures orders -- a closely watched data point that measures the delivery of goods to retailers through July -- that beat Wall Street expectations. That gain compared to a 1 percent decline in the second quarter.

"That's the first thing people look at as a headline," said Stifel Nicolaus analyst Thomas Shaw. "That's strong and that's putting them ahead of the direction that Puma (PUMG.DE) and Adidas (ADSG.DE), their two biggest competitors, were indicating sales would be for 2010."

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Net income in the third quarter ended February 28 was $496 million, or $1.01 cents per share, double the $244 million, or 50 cents per share, in the year-earlier period, when a $241 million charge related to its Umbro acquisition crimped profit.

Analysts, on average, had been expecting earnings of 89 cents per share, according to Thomson Reuters I/B/E/S.

Excluding the year-ago charge, net income would have increased 2 percent, the company said.

Revenue jumped 7 percent to $4.7 billion. Excluding currency fluctuations, revenue edged up 2 percent.

By region, revenue in North America -- the company's largest market -- inched up 1 percent and fell 8 percent in Central and Eastern Europe.

Revenue in China and Japan rose 10 percent and fell 7 percent, respectively. Nike posted a 43 percent revenue gain in its emerging markets region, which includes Brazil.

Non-Nike branded units, which include Converse, Hurley and Umbro, posted a 13 percent revenue gain.

Gross margins improved to 46.9 percent of sales from 43.9 percent in the year-ago quarter, helped by fewer clearance sales, lower freight costs and a better product mix.

At the same time, selling and administrative costs rose 16 percent, due to more marketing spending in advance of this year's World Cup in South Africa, higher performance-based compensation and investment in the company's owned stores.

Calling apparel the single biggest opportunity for Nike, Parker said lagging sales would be helped by "fewer, more productive styles," Parker said. Sales in the category, where the company has focused its efforts over the past year, rose 6 percent in the quarter in the United States.

"We're beginning to see leverage and robust long-term growth opportunities," said Nike Brand President Charlie Denson.

Denson addressed the toning footwear craze, led by footwear companies Skechers (SKX.N) and Adidas' Reebok, which purport to tone without training. While suggesting the company's focus is elsewhere, Denson said Nike would launch in competing product line in the coming months.

Nike shares rose 3.5 percent to $73.35 after closing at $70.88 on the New York Stock Exchange.

(Editing by Edwin Chan Andre Grenon, Leslie Gevirtz)