John Donahoe, CEO of Nike, attends the annual Allen and Co. Sun Valley Media and Technology Conference at Sun Valley Resort in Sun Valley, Idaho, USA on July 10, 2024.
Brendan McDermid | Reuters
Nike announced Thursday that CEO John Donahoe is stepping down and company veteran Elliott Hill is returning from retirement to take the helm of the sneaker giant.
Donahoe, who has been CEO of Nike since January 2020, will step down from his post on October 13. Hill is expected to take over the next day. Donahoe will stay on as an adviser until the end of January.
Shares rose 8% in extended trading Thursday. At close, shares had fallen more than 25% this year.
“I am pleased to welcome Elliott back to Nike. Given our future needs, business performance to date and after conducting a thoughtful succession process, the Board concluded that Elliott's global expertise, 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 phase of growth,” said Mark Parker, Nike's Chief Executive Officer.
Nike is in the midst of a major restructuring after shifting its strategy to direct-to-consumer sales. Critics say that in building up sales in Nike's own stores and on its website, the company lost sight of innovation and failed to produce the kind of groundbreaking sneakers the company was known for.
At the end of June, when Nike announced its fourth-quarter results, it warned that it expected a 10% decline in sales in the current quarter. The company cited weak demand in China and “uneven” consumer trends around the world as reasons.
The outlook was far worse than the 3.2 percent decline expected by analysts.
Following the poor report, Nike experienced its worst trading day in history and some analysts speculated that Donahoe would soon be fired in favor of 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 was happy to welcome Hill back to the team.
“Leadership transitions are never easy, they test you, they challenge you, but this transition has been handled with remarkable care and unwavering commitment to Nike,” Knight said. “I am thrilled to welcome Elliott back to the team. His experience, understanding of Nike and leadership skills are exactly what we need right now. We still have a lot of work to do, but I look forward to getting Nike back on track.”
In a statement, Donahoe said it had become “clear that the time had now come for a change in leadership.”
“Elliott is the right person. I look forward to seeing Nike and Elliott's future success,” he said.
Elliott Hill, incoming President and CEO of NIKE, Inc.
Courtesy of Nike
Hill, who currently lives in Austin, started as an intern at Nike in the 1980s and first became interested in the company after writing a paper about it as part of his graduate school marketing course, according to an interview he gave in 2020.
Over the course of 32 years, Hill worked his way up the corporate ladder to become president of the company's consumer and marketplace division, where he was responsible for leading all commercial and marketing activities for Nike and Jordan Brand. He was popular with employees before retiring in 2020, people close to him told CNBC.
“Nike has always been an integral part of who I am, and I'm ready to lead the company into an even brighter future,” Hill said in a statement. “I look forward to reconnecting with the many employees and trusted partners I've worked with over the years, and am equally excited to build new, impactful 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.”
While Nike is currently going through a difficult period, the company is trying to get back to the fundamentals that have long defined the company and made it the leader in sneakers and sportswear. Unlike previous Nike bosses, Donahoe was not a retailer and had previously owned companies such as eBay and consulting firm Bain & Company. He was hired for his digital skills, among other things, to help Nike with its direct-to-consumer strategy, which included building robust e-commerce operations and data collection efforts.
Under Donahoe's tenure, Nike grew its annual revenue from $39.1 billion in fiscal 2019 to $51.4 billion in fiscal 2024. During the Covid pandemic, online sales boomed, and the strategy of transforming Nike from a brand to a retailer seemed to be working – until the pandemic ended. As Nike worked to cut off its wholesale partners, it paved the way for a number of emerging competitors like On Running and Hoka to take over that crucial shelf space and gain market share.
Earlier this year, Donahoe acknowledged that Nike had gone too far in its efforts to divest from its wholesale partners and said the company was in the process of changing that. In December, the company also announced a major restructuring plan to cut costs by about $2 billion over the next three years. The company later announced it would cut 2% of its workforce, or more than 1,500 jobs, to 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 positive for Nike because he has a deep understanding of the company's culture, which she said is suffering from low morale.
“He's dealing with a difficult environment in terms of morale in the company and has to restore some of the culture that the company has lost,” Ramirez said. “He has a lot of work to do in different teams, but I think that's where the focus has to be, on the company culture and therefore the ability to develop better products and innovations.”
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