Sept 19 (Askume) – Nike Inc (NKE.N) said on Thursday that former senior executive Elliott Hill will rejoin the company and replace John Donahoe as chief executive chairman and CEO, as the sportswear giant hopes to revive sales and find success.
The company’s shares rose 8% in after-hours trading.
Hill spent 32 years at Nike and held senior leadership roles in Europe and North America, helping grow the business to more than $39 billion, the company said.
Previously, he served as President of Nike Consumer Markets, leading all commercial and marketing functions for the Nike and Jordan brands and retired in 2020.
Hill’s compensation as president and CEO will include an annual base salary of $1.5 million, Nike said in a regulatory filing. He will take over as CEO on Oct. 14.
Analysts applauded the move. Jessica Ramirez of Jane Haley & Associates said the CEO change “sends a positive signal because he is someone who understands the brand and the company very well.”
Donahoe will be tasked with strengthening Nike’s online presence and increasing sales through direct-to-consumer channels.
The boost helped the company meet post-pandemic demand for sports and casual apparel, pushing Nike’s annual sales above $50 billion for the first time in fiscal 2023.
However, sales are under pressure and growth is slowing, according to London Stock Exchange Group estimates. Nike’s annual sales are expected to fall to $48.84 billion in fiscal 2025 as inflation-weary consumers cut discretionary spending and China has a slower-than-expected recovery.
The lack of innovative and attractive products has also reduced the demand for Nike recently . Roger Federer endorses Hoka and DeckersRival brands such as DECK.N are wooing buyers and retail partners with sleeker, more stylish sneakers.
Expectations of a top-level change rose after billionaire investor William Ackman disclosed his stake in Nike . His Pershing Square Capital Management bought 16.3 million shares of Nike stock and now owns 16.3 million shares, a person familiar with the matter said. Ackerman 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 disclosed his stake in Nike through public filings but has not approached the company.
Recently, the boards of at least two other consumer product and retail companies took steps to oust top executives even before activist investors prompted action .
Hill’s previous role as the steward of Nike’s valuable Jordan brand, a major profit driver for the company, could also help the sportswear giant gain some momentum. As other sneaker brands, including On Running , are experiencing explosive growth in 2023, the value of some Jordans is declining in the resale market.
Over the past few years, Nike has reduced its partnerships with retailers and planned to drive more sales through its own stores and website. Those sales did not succeed, causing the company to save $2 billion over three years.
As part of the plan, Nike has so far laid off workers, reduced the supply of classic shoes such as the Air Force 1 and tried to improve its supply chain to boost profits.
David Swartz, a senior analyst at Morningstar Research, said: “Nike clearly wants to bring back someone who has a lot of experience” and “a deep understanding of Nike and its issues. As opposed to John Donahoe, who had no experience in the field.”
Swartz said Hill should “work to improve some of Nike’s relationships with its retail partners that buy large volumes of Nike shoes.” He added, “Over the past few years, Nike has lost some customers and recalled some products, which has led to some animosity toward Nike among sneaker and footwear retailers.”
Thomas Hayes, president of Great Hill Capital, called Hill “an excellent choice.” He said Nike now needs to “innovate and improve relationships with wholesalers.” Great Hill Capital does not own shares in Nike.
A native of Austin, Texas, Hill began his Nike career as a showroom assistant in Memphis, Tennessee and quickly moved up to a sales position, working out of the Dallas office and visiting small sporting goods stores.
“I had samples, I would call, make an appointment, go to the sporting goods store and stand in line,” Hill said in a December 2023 podcast interview. “I developed incredible relationships with some of those people. Even today, I’m in touch with some of those retailers.” He eventually began helping launch new Nike products.
Nike’s stock market value rose by $11 billion in afternoon trading on Thursday following the CEO’s announcement.
