Nike veteran Elliott Hill to replace Donahoe as CEO; analysts expect improved results – Industry News

Nike said Thursday that former Chief Executive Elliott Hill will return to the company to replace John Donahoe as chairman and CEO, as the sportswear giant shakes up its leadership amid efforts to revive sales and battle growing competition. The company’s shares rose 8% in after-hours trading.

Hill worked at Nike for 32 years and held executive positions in Europe and North America, helping grow the company to more than $39 billion, the company said.

He previously served as Nike’s president, Consumer Marketplace, leading all commercial and marketplace operations for the Nike and Jordan brands before retiring in 2020. Nike said in a regulatory filing that Hill’s compensation as president and CEO will include an annual base salary of $1.5 million. He will assume the CEO role on Oct. 14.

Analysts welcomed the move. The CEO change “sends a positive signal because it’s someone who knows the brand and knows the company very well,” said Jessica Ramirez of Jane Hall & Associates.

Donahoe was tasked with strengthening Nike’s online presence and increasing sales through direct-to-consumer channels, a push that initially helped the company boost demand for sportswear and leisurewear in the wake of the pandemic, leading to Nike surpassing $50 billion in annual sales for the first time in fiscal 2023.

But sales have since come under pressure, with growth slowing, according to estimates compiled by LSEG. Nike’s annual sales are expected to fall to $48.84 billion in fiscal 2025 as inflation-weary consumers cut discretionary spending and the Chinese market recovers more slowly than expected. A lack of innovative and compelling products has also recently stymied demand for Nike. Rival brands, including Roger Federer-backed On and Deckers’ Hoka, have been attracting shoppers and retail partners with athletic shoes seen as more fashionable and trendy. Expectations of a change at the top grew after billionaire investor William Ackman disclosed a stake in Nike. His Pershing Square Capital Management has continued to buy and now owns 16.3 million Nike shares, a person familiar with the matter said. Ackman could not immediately be reached for comment.

A person familiar with Ackman’s thinking said Hill would be his first choice to succeed Donahoe. Ackman, who announced his Nike stake in a public filing, has not been in touch with the company. Recently, corporate boards at at least two other consumer and retail companies have moved to fire top executives before activist investors told them to act. Hill’s experience as the former steward of Nike’s prized Jordan brand, a key source of the company’s profits, could also help the sportswear giant regain some momentum. Some Jordan shoes have been declining in resale value in 2023 as other sneaker brands, including On Running, have seen a surge.

Over the past few years, Nike has scaled back its retail partnerships and continued to pursue its plan to increase sales through its own stores and websites. Those sales fell through, putting the company on track for $2 billion in cost savings over three years.

As part of the plan, Nike has so far cut jobs, reduced supplies of classic shoes like the Air Force 1 and tried to streamline its supply chain to boost margins.

“It’s clear that Nike wanted to bring back someone with a lot of experience” and “a deep understanding of Nike and its issues — unlike John Donahoe, who came in with no industry experience,” said David Swartz, senior analyst at Morningstar Research.

Hill will have to “work to repair some of Nike’s relationships” with retail partners that buy Nike shoes wholesale, Swartz added. “Nike has lost some customers over the years and discontinued some products, which has created some resentment toward Nike” among sneaker and footwear retailers, he said.

Thomas Hayes, president of Great Hill Capital, called Hill “a great choice.” Nike now needs to “innovate and repair relationships with wholesalers,” he added. Great Hill Capital does not own Nike stock.

Born in Austin, Texas, Hill began his Nike career as a showroom assistant in Memphis, Tennessee, and soon worked his way up to a sales position, working out of the Dallas office and visiting small sports shops. “I would bring samples, make calls, make appointments, show up at the sports shop and pitch the line,” Hill said in a December 2023 podcast interview. “I built incredible relationships with some of those people. I’m still in touch with some of those retailers today.” He eventually began helping launch new Nike products.

Nike’s stock market value rose $11 billion on Thursday in long-term trading after its CEO was announced.