Nike CEO John Donahoe attends the Allen and Co. Sun Valley annual media and technology conference at the Sun Valley Resort in Sun Valley, Idaho, U.S., July 10, 2024.
Brendan McDermid | Reuters
Nike announced Thursday that its chief executive John Donahoe will step down and that company veteran Elliott Hill will come out of retirement to take the helm of the sneaker giant.
Donahoe, who has been Nike's CEO since January 2020, will retire from his position on Oct. 13. Hill is scheduled to take over the role the following day. Donahoe will remain as an advisor until the end of January.
Shares rose 8% in after-hours trading Thursday. At the close, the stock had fallen more than 25% this year.
“I am excited to welcome Elliott back to Nike. Given our future needs, the company's past performance and after conducting a thoughtful succession process, the Board of Directors concluded that it was clear that Elliott's global experience, leadership style and deep understanding of our industry and partners, coupled with his passion for sport, our brands, products, consumers, athletes and employees, make him the right person to lead Nike's next stage of growth,” said Mark Parker, Nike Executive Chairman.
Nike is in the midst of a broader restructuring after shifting its strategy to selling directly to consumers. Critics say that in the process of boosting sales at Nike's own stores and website, it lost sight of innovation and failed to produce the types of innovative sneakers the company was known for.
In late June, when it reported fiscal fourth-quarter results, Nike warned that sales were expected to fall 10% during the current quarter, citing weak demand in China and “uneven” consumer trends around the world.
The outlook was much worse than the 3.2% drop that analysts had expected.
Following the preliminary report, Nike had its worst trading day in history and some analysts speculated that Donahoe would soon be replaced by a new CEO. At the time, Nike co-founder Phil Knight said the company stood by Donahoe and that the executive had its “unwavering confidence and full support.”
But on Thursday, Knight said in a statement that he is excited to welcome Hill back to the team.
“Leadership changes are never easy – they test you, they challenge you – but this transition has been managed with extraordinary thoughtfulness and an unwavering commitment to Nike,” Knight said. “Looking ahead, I couldn’t be more excited to welcome Elliott back to the team. His experience, knowledge of Nike and leadership are exactly what is needed right now. We have a lot of work to do, but I look forward to Nike getting back on track.”
In a statement, Donahoe said it “became clear that now was the time for a leadership change.”
“Elliott is the right person. I look forward to seeing Nike and Elliott's future success,” he said.
Elliott Hill Named New President and CEO of NIKE, Inc.
Courtesy: Nike
Hill, who now resides in Austin, began working at Nike as an intern in the 1980s and first became interested in the company after writing a paper about it for her marketing class in graduate school, according to an interview she gave in 2020.
Over the course of 32 years, Hill rose through the ranks to become president of the company's consumer and marketing division, where he was responsible for running all marketing and business operations 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’m eager to reconnect with the many trusted employees and partners I’ve worked with over the years, and I’m equally excited to build impactful new relationships that will move us forward. Together with our talented teams, I look forward to delivering bold, innovative products that will differentiate us in the marketplace and captivate consumers for years to come.”
Nike, which is currently struggling, is trying to get back to the fundamentals that long defined the business and made it the market leader in sneakers and sportswear. Unlike Nike's previous leaders, Donahoe was not a retailer and had previously run companies such as eBay and consulting firm Bain & Company. He was appointed in part for his digital skills to help Nike lead its direct sales strategy, which included developing robust e-commerce operations and data collection efforts.
Under Donahoe, Nike grew its annual sales from $39.1 billion in fiscal 2019 to $51.4 billion in fiscal 2024. During the pandemic, online sales were booming, and Nike’s strategy of transforming from a brand to a retailer seemed to be working — until the pandemic began to end. As Nike worked to cut off supply from its wholesale partners, it paved the way for a host of emerging competitors like On Running and Hoka to grab crucial shelf space and gain market share.
Earlier this year, Donahoe acknowledged that Nike had gone too far in its efforts to distance itself from its wholesale partners and said the company was in the process of fixing it. In December, he also announced a broad restructuring plan to cut costs by about $2 billion over the next three years. He later said he would shed 2% of his workforce, or more than 1,500 jobs, so he could invest in its growth areas, such as athletics, women’s sports and the Jordan brand.
