On Thursday, Nike (NYSE: NKE) said that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and CEO, as the sportswear giant shakes up its top rank amid efforts to revive sales and battle rising competition.
The company’s shares rose 8% in after-hours trading.
Hill was at Nike for 32 years and held senior leadership positions across Europe and North America where he helped expand the business to more than $39 billion, the company said.
He was previously Nike’s president, consumer marketplace, leading all commercial and market operations for the Nike and Jordan brands before retiring in 2020.
In a regulatory filing, Nike (NYSE: NKE) said that Hill’s compensation as president and CEO will include an annual base salary of $1.5 million. Hill will take over as CEO on October 14.
Analysts cheered the move. The CEO change “gives a positive signal because it is someone that knows the brand and knows the company very well,” said Jessica Ramirez of Jane Hali & Associates.
Nike tasked Donahoe with bolstering its online presence and driving sales through direct-to-consumer channels.
The push initially helped the company build on the demand for athletic and leisure wear following the pandemic, resulting in Nike touching more than $50 billion in annual sales in fiscal 2023 for the first time.
However, sales have since come under pressure and growth has slowed, according to estimates compiled by LSEG. Nike’s annual sales are expected to fall to $48.84 billion for fiscal 2025 as inflation-weary customers cut back on discretionary spending and China’s market rebounds more slowly than expected.
A lack of innovative and appealing products has also recently tripped demand for Nike. Rival brands including Roger Federer-backed On and Deckers’ Hoka are attracting shoppers and retail partners with sneakers considered more fashionable and trendy.
Expectations for a change at the top were heightened after billionaire investor William Ackman disclosed a stake in Nike (NYSE: NKE). His Pershing Square Capital Management has continued to buy and now owns 16.3 million shares in Nike, a person familiar with the position said. Ackman was not immediately reachable for comment.
A person familiar with Ackman’s thinking said Hill would have been his top choice to replace Donahoe. Ackman, who announced his Nike stake via a public filing, hadn’t been in touch with the company.
Recently the corporate boards of at least two other consumer and retail companies have moved to toss top executives before activist investors told them to act.
Hill’s background as a former steward of Nike’s valuable Jordan brand, a major profit-driver for the company, could also help the sportswear giant regain some momentum. The value of some Jordan shoes in 2023 had been slipping on the resale market as other sneaker brands, including On Running, experienced meteoric growth.
In the last couple of years, Nike (NYSE: NKE) has curtailed partnerships with retailers and pushed ahead with its plan to drive more sales through its own stores and websites. Those sales did not materialize and put the company on a path to seek $2 billion in cost savings over three years.
As part of the plan, Nike has so far cut jobs, reduced the supply of classic shoes such as the Air Force 1, and tried to improve the supply chain to boost margins.
“It clearly looks like Nike wanted to bring back somebody with a lot of experience” and “deep knowledge of Nike and its issues – unlike John Donahoe, who came in without any experience in the industry,” said David Swartz, senior analyst at Morningstar Research.
Hill will have to “work on repairing some of Nike’s relationships” with retail partners who buy Nike shoes at wholesale, Swartz added. “Nike has dropped some customers over the years and pulled back some products and that has created some ill will towards Nike” among sneaker and footwear retailers, he said.
Thomas Hayes, chairman at Great Hill Capital, called Hill a “great pick.” Nike now needs to “innovate and repair relationships with wholesalers,” he added. Great Hill Capital does not hold shares in Nike.
Born in Austin, Texas, Hill started his Nike career as an assistant in the Memphis, Tennessee, showroom and was soon promoted to a sales position, working out of the Dallas office and calling on mom-and-pop sporting goods stores.
“I had samples with me, and I would call, make appointments, show up at the sporting goods store, and present the line,” Hill said in a December 2023 podcast interview. “I made unbelievable relationships with some of those people. Even today, I still keep in touch with a few of those retailers.” He eventually moved into helping to launch new Nike products.
Nike (NYSE: NKE) stock market value increased by $11 billion in extended trade on Thursday following the CEO announcement.
(Source: ReutersReuters)
