Nike CEO John Donahoe attends the annual Allen & Company Sun Valley Media & Technology Conference at Sun Valley Resort in Sun Valley, Idaho, USA on July 10, 2024.
Brendan McDiarmid | Reuters
Nike The company announced Thursday that CEO John Donahoe is stepping down and that company veteran Elliot Hill is coming out of retirement to take over the helm of the sneaker giant.
Donahoe, who has served as Nike’s CEO since January 2020, will step down on Oct. 13. Hill will take over the role the following day. Donahoe will remain in an advisory role until the end of January.
The stock rose 8% in extended trading on Thursday. As of the close, the stock was down more than 25% this year.
“We are pleased to welcome Elliott back to Nike. After considering our future needs, our performance to date and a thoughtful succession selection process, the Board concluded that Elliott’s global expertise, leadership style, deep understanding of the industry and our partners, and passion for sport, our brands, products, consumers, athletes and employees clearly make him the right person to lead Nike through its next phase of growth,” said Nike Chairman Mark Parker.
Nike is in the midst of a broader restructuring after pivoting to a direct-to-consumer strategy, and critics say the company lost sight of innovation and failed to mass-produce the groundbreaking sneakers it prides itself on as it expanded sales through its own stores and website.
When Nike reported its fourth-quarter earnings in late June, it warned that it expected its sales to fall 10% in the current quarter, citing weak demand in China and “uneven” consumer trends around the world.
The outlook was much worse than the 3.2% decline analysts had expected.
Following the damning report, Nike suffered its worst trading day in its history and some analysts speculated that Donahoe would be quickly replaced by a new CEO. At the time, Nike co-founder Phil Knight said the company was on Donahoe’s side and that he had “unwavering confidence and full support.”
But Knight said in a statement Thursday that he was excited to have Hill rejoin the team.
“Leadership changes are never easy – they test and challenge you, but this transition has been handled with incredible thoughtfulness and unwavering commitment to Nike,” Knight said. “Going forward, I couldn’t be more pleased to have Elliott on the team – his experience, understanding of Nike and leadership are exactly what we need right now. There’s a lot of work to do, but I look forward to getting Nike back on track.”
“It has become clear that the time for a change in leadership is now,” Donahoe said in a statement.
“Elliott is the perfect fit and we look forward to seeing Nike and Elliott achieve great things in the future,” he said.
Nike’s new president and CEO Elliot Hill
Provided by: Nike
Hill, now based in Austin, started working at Nike as an intern in the 1980s and became interested in the company after writing a thesis about it for a graduate marketing class, she said in a 2020 interview.
Hill worked his way up the company’s ranks over 32 years, eventually becoming president of the company’s consumer and marketplace division, responsible for overseeing all commercial and marketing operations for Nike and Jordan Brand. Before his retirement in 2020, Hill was known to be well-liked by employees, a person close to him told CNBC.
“Nike has always been central to me, and I’m ready to help lead Nike into an even brighter future,” Hill said in a statement. “I’m excited to reconnect with the many employees and trusted partners I’ve worked with for many years, and to build new, impactful relationships that will drive us forward. Together with my talented team, I look forward to delivering bold, innovative products that stand out in the marketplace and inspire consumers for years to come.”
Nike is facing tough times, but it is returning to the fundamentals that have long defined its business as the market leader in sneakers and sportswear. In contrast to Nike’s previous leaders, Donahoe is not a retailer, and has previously led companies such as: Ebay He was named CEO of consulting firm Bain & Co. His digital acumen led him to lead Nike’s direct-selling strategy, including building a strong e-commerce business and data-gathering efforts.
Under Donahoe’s tenure, Nike’s annual sales grew from $39.1 billion in fiscal 2019 to $51.4 billion by fiscal 2024. Nike’s strategy to transform itself from a brand to a retailer appeared to be working, as online sales surged during the COVID-19 pandemic, until the pandemic faded. Nike’s efforts to cut ties with wholesale partners paved the way for a host of upstart competitors, including On Running and Hoka, to take over key shelf space and steal market share.
Earlier this year, Donahoe acknowledged that Nike had overstepped its bounds in cutting ties with wholesale partners and said the company was making improvements. In December, Nike also announced a major restructuring plan aimed at cutting about $2 billion in costs over the next three years. It then said it would cut 2% of its workforce, or more than 1,500 jobs, to invest in growth areas such as running, women’s products and the Jordan Brand.
Jessica Ramirez, a senior research analyst at Jane Harri & Associates, said Hill’s appointment is a positive for Nike because she has a deep understanding of the company’s culture, which has struggled with low morale.
“He’s facing a tough environment in terms of morale and rebuilding some of the culture that the company lost,” Ramirez said. “He has to do a lot of work with different teams, but I think that’s what needs to be the focus, the culture of the company, and that’s what’s going to drive better products and the ability to create new things.”
