John Donahoe, CEO of Nike, Inc., attends the annual Allen and Co. Sun Valley Media and Technology Conference at the Sun Valley Resort in Sun Valley, Idaho, U.S., July 10, 2024.
Brendan McDiarmid | Reuters
Nike Sneaker giant Nike announced Thursday that its CEO John Donahoe will step down and veteran Elliot Hill will come out of retirement to take over the company.
Donahoe, who has been Nike’s CEO since January 2020, will retire from his position on Oct. 13. Hill is set to take over the role the following day. Donahoe will remain an advisor to the company through the end of January.
Shares rose 8% in trading Thursday. By the close, shares were down more than 25% this year.
“I am delighted to welcome Elliott back to Nike,” said Mark Parker, Nike CEO. “Given our needs for the future, the company’s past performance, and after a thoughtful succession process, the Board of Directors concluded that it is clear that Elliott’s global experience, leadership style, deep understanding of our industry and our partners, coupled with his passion for sport, our brands, our products, our consumers, our athletes and our employees, make him the right person to lead Nike’s next phase of growth.”
Nike is now undergoing a broader restructuring after shifting its strategy to sell directly to consumers. Critics say the company has lost focus on innovation in building sales in its stores and online, and has failed to produce the kind of groundbreaking sneakers the company is known for.
In late June, when it reported its fiscal fourth-quarter results, Nike warned that it expected sales to fall 10% during the current quarter, citing weak demand in China and “unbalanced” consumer trends around the world.
The forecast was much worse than the 3.2% decline analysts had expected.
Following the report, Nike had its worst trading day in history, and some analysts predicted 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 that the CEO had his “unwavering confidence and full support.”
But on Thursday, Knight said in a statement he was excited to welcome Hill back to the team.
“Leadership changes are never easy, they test and challenge you, but this transition has been handled with great thought and unwavering commitment to 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 we need at this moment. We have a lot of work to do but I look forward to seeing Nike get back to its normal pace.”
In a statement, Donahue said it “became clear that the time had come for a change in leadership.”
“Elliott is the right person,” he said. “I look forward to seeing Nike and Elliott succeed in the future.”
Elliot Hill, New CEO of NIKE, Inc.
Courtesy: Nike
Hill, who now works in Austin, started working at Nike as an intern in the 1980s, and first became interested in the company after writing a research paper about it for his graduate marketing class, according to a 2020 interview.
Over the course of 32 years, Hill worked his way up the chain before becoming president of the company’s consumer and marketplace division, where he was responsible for leading all commercial and marketing operations for Nike and the Jordan Brand. He was known to be well-liked by employees before retiring 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 new and impactful relationships that will propel us forward. Together with our talented teams, I look forward to delivering bold, innovative products that set us apart in the marketplace and appeal to consumers for years to come.”
At a time when Nike is going through a difficult period, it is trying to get back to the basics that have long defined the company and made it the market leader in athletic shoes and sportswear. Unlike previous Nike leaders, Donahoe is not a retailer and has previously led companies such as eBay He was hired in part for his digital expertise so he could help Nike execute its direct-selling strategy, which included building robust e-commerce operations and data collection efforts.
Under Donahoe, Nike’s annual sales increased from $39.1 billion in fiscal 2019 to $51.4 billion in fiscal 2024. During Covid, online sales boomed and Nike’s strategy of transforming itself from a brand to a retailer seemed to be working — until the pandemic began to wind down. As Nike cut ties with its wholesale partners, it paved the way for a host of emerging competitors like On Running and Hoka to grab that crucial shelf space and market share.
Earlier this year, Donahoe admitted that Nike had gone too far in its efforts to move away from its wholesale partners, and said the company was working to fix that. In December, the company also announced a sweeping restructuring plan to cut about $2 billion in costs over the next three years. Later, it said it would cut 2 percent of its workforce, or more than 1,500 jobs, so it could invest in its growth areas, such as running, women’s and the Jordan brand.
Jessica Ramirez, a senior research analyst at Jane Haley & Associates, said Hill's appointment was positive for Nike because of his deep understanding of the company's culture, which she said was suffering from declining morale.
“He’s facing a tough environment in terms of morale in the company, rebuilding some of the culture that the company has lost,” Ramirez said. “He has a lot of work to do across different teams, but I think that’s what needs to be the focus, the culture of the company, and therefore enabling the ability to have better and new products.”
