Nike raised its full-year earnings forecast Tuesday after reporting quarterly results that beat forecasts, but warned of pressure on margins as it continues to get rid of excess inventory with big discounts.

The company noted strong demand for its sneakers, including classic models such as the Jordan Retro and new franchise models such as the LeBron 20, which helped increase its market share.

Nike said its apparel inventory declined in the third quarter and expects inventory to be “healthy” by the end of fiscal 2023.

Rival Adidas is still going through a breakup with the artist formerly known as Kanye West, and the German company is expected to post its first annual loss this year in three decades.

Nike shares fell 2 percent in extended trading Tuesday after the company said it expects gross margins in 2023 to decline by about 250 basis points, the lower end of a previous forecast.

The company’s margins continue to be pressured by a strong U.S. dollar, higher shipping costs and Nike’s efforts to offer higher discounts in an effort to get rid of excess inventory.

Nike is in a much better inventory position than it has been in the past six months

Sales in Greater China are down about 8 percent despite the country easing pandemic-related restrictions, which is expected to benefit the company in the near term.

Nike’s recovery in China looks much better than Adidas, which is “falling apart” in that country

Nike now expects full-year revenue to grow in the high-single-digit range, up from its previous forecast of growth in the mid-single-digit range.

For the fourth quarter, the company expects revenue to grow at or in the low single-digit range, compared with a 2.42% growth forecast

In the third quarter, Nike reported revenue of $12.39 billion, beating forecasts of $11.47 billion, and earnings of 79 cents per share beat forecasts of 55 cents.