John Donahoe, CEO of Nike, attends the annual Allen and Co. conference. Sun Valley Media and Technology at Sun Valley Resort in Sun Valley, Idaho, USA, July 10, 2024.
Brendan McDermid | Reuters
Win on Thursday announced that CEO John Donahoe is stepping down and company veteran Elliott Hill is coming out of retirement to take the helm of the sneaker giant.
Donahoe, who has been CEO of Nike since January 2020, will retire from his position on October 13. Hill is expected to take over the next day. Donahoe will remain as a consultant until the end of January.
Shares rose 8% in extended trading on Thursday. Since the close, shares are down more than 25% this year.
“I am thrilled to welcome Elliott back to Nike. Given our needs going forward, the past performance of the business, and after conducting a careful succession process, the Board concluded that his global expertise, leadership style and Elliott’s deep understanding of the industry and our partners, combined with his passion for sports, our brands, products, consumers, athletes and employees, make him the right person to lead the next stage of our growth. Nike,” said Mark Parker, executive chairman of Nike.
Nike is in the midst of a wider restructuring after shifting its strategy to sell directly to consumers. Critics say that in the process of increasing sales at Nike’s stores and website, it lost sight of innovation and failed to find the types of cutting-edge sneakers the company was known for.
In late June, when it announced its fourth-quarter financial results, Nike warned that it expected sales to fall 10% in the current quarter, citing soft demand in China and “uneven” consumer trends around the world.
The outlook was much worse than the 3.2% drop that analysts had expected.
After the sketchy report, Nike had its worst trading day in history, and some analysts speculated that Donahoe would soon be ousted in favor of a new CEO. At the time, Nike co-founder Phil Knight said the company stood by Donahoe and the executive had his “unwavering confidence and full support.”
But on Thursday, Knight said in a statement that he is excited to welcome Hill back to the team.
“Changes in leadership are never easy, they test you, they challenge you, but this transition has been handled with remarkable care and unwavering commitment at Nike,” Knight said. “Looking ahead, I couldn’t be more excited to welcome Elliott back to the team. His experience, understanding of Nike and leadership are exactly what is needed right now. We have a lot of work to do, but I look forward to we see Nike again at its pace.”
In a statement, Donahoe said it “became clear that now was the time to make a change in leadership.”
“Elliott is the right person. I look forward to seeing Nike and Elliott’s future successes,” he said.
Incoming President and CEO of NIKE, Inc. Elliot Hill
Courtesy: Nike
Hill, who is currently based in Austin, started at Nike as an intern in the 1980s and became interested in the company after writing a paper about it for his graduate marketing course, according to a interview gave in 2020.
Over the course of 32 years, Hill worked his way up the chain before becoming the company’s president of consumer and purchasing, where he was responsible for leading all commercial and marketing activities for Nike and Jordan Brand. He was known to be well-liked among employees before he retired in 2020, people close to him told CNBC.
“Nike has always been a core part of who I am, and I’m ready to help lead it into an even brighter future,” Hill said in a statement. “I am eager to reconnect with the many employees and trusted partners I have worked with over the years, and equally excited to build new, effective relationships that will drive us forward. Together with our talented teams, I look forward to boldly delivering, innovative products that set us apart in the market and enchant consumers for years to come.”
As Nike goes through its current bumpy renewal, it’s trying to return to the fundamentals that have long defined the business and made it the market leader in athletic shoes and apparel. Unlike previous Nike leaders, Donahoe was not a retailer and had previously run companies such as eBay and the consulting firm Bain & Company. He was appointed in part for his digital operations so he could help lead Nike through its direct selling strategy, which included building strong e-commerce operations and data collection efforts.
Under Donahoe’s tenure, Nike grew its annual sales from $39.1 billion in fiscal 2019 to $51.4 billion in fiscal 2024. During Covid, online sales are booming and its strategy to transform Nike from brand to retailer seemed to be working – until the pandemic began to end. As Nike worked to cut off its wholesale partners, it paved the way for a number of new competitors, such as On Running and Hoka, to occupy this critical shelf space and capture market share.
Earlier this year, Donahoe acknowledged that Nike went too far in its efforts to distance itself from its wholesale partners, and said the company was in the process of fixing that. In December, it also announced a broad restructuring plan to cut costs by about $2 billion over the next three years. It later said it would shed 2% of its workforce, or more than 1,500 jobs, so it could invest in its growth areas, such as running, the women’s category and the Jordan brand.
Jessica Ramirez, senior research analyst at Jane Hali & Associates, said Hill’s appointment is a positive for Nike because of his deep understanding of the company’s culture, which she said is struggling from a decline in morale.
“He’s facing a tough environment in terms of morale in the company, recreating some of that culture that the company has lost,” Ramirez said. “He does have a lot of work to do in different groups, but I think that should be the focus, the culture of it, and therefore enable us to have better products and new ones.”
