Hopeful glimmerings NikeChina’s potential growth could prove to be a boon for retailers that do business in China, especially as the country is undergoing a long-term pandemic and other unrest.

After Tuesday’s announcement, Nike shares rose more than 5%. the sneaker giant said its China business is improving in spite of recent backlash against Western brandsThere is a lack of merchandise on the market. Nike demonstrated, at least temporarily, that it can handle larger macroeconomic problems, such as ongoing supply chain backlogs better than most expected. Nike shares fell 22% in the year ahead of Monday’s report.

Analysts believe that Nike’s results are a positive sign for Puma and Adidas, which have similar international exposure. Nike is yet to give an outlook on its next fiscal year. Its fiscal fourth quarter results will be announced in June. There are many volatile factors which could cause Nike to change its forecast. However, trends can still change.

Nike reported that sales in China declined 8% over the past three months, which was better than analysts expected. The 24% decrease that Nike had recorded during the quarter before was a significant improvement. China is a notable market for Nike.

Tom Nikic from Wedbush stated that China is the greatest overhang in Nike’s stock, and now it appears to be “moving in positive direction”.

With brand momentum that is significant and long term [earnings]”We believe that Nike is one of our highest-quality and most visible growth stories, driven by direct-to-consumer initiatives, he stated.

In a conference call following earnings, Nike’s management explained how the company is able to appeal to shoppers abroad. Nike, for example, has been able to expand its reach into China by partnering with Pou Sheng (a Chinese retailer distributor) and Top Sports (a Chinese sports distributor). A recent campaign by the brand was also mentioned, which is tied to Beijing Olympics.

Matthew Friend, Chief Financial Officer said that the momentum is encouraging and it shows our optimism about being able to go back to a long term growth algorithm. We are operationally monitoring the Covid-related lockdowns on the market and their impact on the fourth-quarter of those lockdowns at the moment is uncertain at the moment. But it feels different.

Friend stated that Nike anticipates sequential improvements in China in the fourth quarter of fiscal year as it monitors a recent increase in Covid cases, renewed lockdowns and continues to monitor a new uptick in Covid.

Omar Saad from Evercore ISI called this quarter a “turning point” for Nike China. He stated in a note addressed to clients that the “strong performance” alleviates some of the concerns about Covid’s impact on China demand. This also puts to rest concerns that any shift towards domestic brands could severely hamper Nike’s growth.

Nike stated that its sales forecast for the current fiscal year is to see growth of mid-single figures compared with previous 12-month periods. Analysts predicted that revenue would rise by 5.3%.

This is a developing story. Keep checking back for more updates.