Photo source: Fortune
Nike has announced a major leadership transition, with CEO John Donahoe stepping down and company veteran Elliott Hill returning from retirement to take the reins.
Donahoe, who has served as CEO since January 2020, will officially retire on October 13, with Hill taking over the following day. Donahoe will remain as an advisor until the end of January. Following this news, Nike’s stock rose by 8% in after-hours trading, although it has still declined over 25% this year.
Mark Parker, Nike’s executive chairman, expressed enthusiasm for Hill’s return.
“I am excited to welcome Elliott back to Nike. Given our needs for the future, the past performance of the business, and after conducting a thoughtful succession process, the Board concluded it was clear Elliott’s global expertise, leadership style, and deep understanding of our industry and partners make him the right person to lead Nike’s next stage of growth,” Parker stated.
Nike is currently restructuring its business model to focus more on direct-to-consumer sales. Critics argue that in doing so, the company has lost its innovative edge and failed to produce groundbreaking products.
In late June, during its fiscal fourth-quarter earnings report, Nike projected a 10% decline in sales for the upcoming quarter due to weak demand in China and inconsistent global consumer trends. This forecast was worse than analysts’ expectations of a 3.2% decline and led to Nike’s worst trading day ever.
Phil Knight, Nike’s co-founder, reaffirmed support for Donahoe at that time but expressed excitement about Hill’s return.
“Leadership changes are never easy. Looking forward, I couldn’t be more excited to welcome Elliott back to the team. His experience and understanding of Nike is exactly what’s needed at this moment,” said Knight.
Donahoe stated that it was time for a leadership change, and that “Elliott is the right person” for the job.
Hill began his career at Nike as an intern in the 1980s and rose through various roles over 32 years before becoming president of the consumer and marketplace division. He is known for being well-liked among employees.
“Nike has always been a core part of who I am,” Hill said. “I’m eager to reconnect with employees and partners. Together with our talented teams, I look forward to delivering bold, innovative products.”
As Nike faces challenges, it aims to return to its foundational principles that established its market leadership. Donahoe’s tenure saw annual sales grow from $39.1 billion in fiscal 2019 to $51.4 billion in fiscal 2024. However, as Nike cut ties with wholesale partners during the pandemic recovery, competitors like On Running and Hoka gained market share.
Earlier this year, Donahoe acknowledged that Nike may have overextended itself regarding wholesale partnerships and announced a restructuring plan aimed at cutting costs by about $2 billion over three years while reducing its workforce by over 1,500 jobs.
