• by Tanya Gazdik , September 20, 2024

Nike CEO John Donahoe is being replaced by company veteran Elliott Hill.

Donahoe, who has been the brand’s top leader since January 2020, will step down on Oct. 13 but will remain on as an advisor through the end of January, according to the company. Hill worked at Nike for 32 years before retiring in 2020.

“Nike is in the midst of a broader restructuring after it shifted its strategy to sell directly to consumers,” according to CNBC. “Critics say in the process of building out sales at Nike’s own stores and website, it lost sight of innovation and failed to churn out the types of groundbreaking sneakers the company was known for.”

Nike warned in late June that it was expected sales to drop 10% during its current quarter, citing soft demand in China and “uneven” consumer trends across the globe.

But as recently as June, Nike founder Phil Knight told CNBC that Donahoe has his “unwavering confidence and full support,” according to an earlier CNBC story. The release announcing the personnel moves doesn’t mention Knight, but he owns so many shares it’s unlikely Donahue was let go without Knight’s blessing. 

"Nike shares jumped more than 7% in extended New York trading,” according to Bloomberg. “The stock has tumbled 25% this year as the sneaker giant struggles with falling sales and customer defections to upstart athletic brands such as On and Hoka, as well as to more established rivals like Adidas. Donahoe, a former eBay Inc. chief and Bain & Co. consultant who took over in 2020, has largely been the face of the downfall.” 

Analysts say the moves could help Nike return to what makes it special: its product innovation and marketing prowess.

"Simeon Siegel, a retail analyst at BMO Capital Markets, said Nike’s ‘magic’ was that it was the largest player in the sneaker category, with a huge marketing budget,” according to The New York Times. “Mark Parker, the executive chairman of Nike and who served as chief executive before Donahoe, said the board had conducted a 'thoughtful succession process.'" 

During his four-year tenure, Donahoe has focused on changing the way the company sells shoes. 

“Nike cut ties with longtime retail partners like Foot Locker, DSW and Macy’s and tried selling more merchandise directly to consumers,” according to The Wall Street Journal. “The CEO also leaned heavily on increasing revenues by selling limited edition sneakers, which eventually became ubiquitous. The company is now struggling to maintain its foothold as consumers buy fewer Nike shoes and more from competitors like Adidas and New Balance.”

Hill has a deep history with the company, 

“Elliott Hill started at Nike as an intern in 1988 but steadily scaled its ranks, banking on values of grit and hard work ingrained in him as the son of a single mom in a working class Texas neighborhood,” according to Reuters. “Those qualities may be useful again when Hill becomes the global sneaker and sportswear brand's top boss next month, helping revive the company where he has spent his whole career.”