Nike’s New CEO Aims to Strengthen Retailer Relationships in Sales Revival Effort

By Juveria Tabassum and Aishwarya Venugopal

Nike’s newly appointed CEO is set to strengthen the company’s efforts to mend its relationships with retailers to boost sales, stepping away from the strategy implemented by outgoing CEO John Donahoe, which emphasized direct sales through Nike’s own stores and online platforms.

Elliott Hill, a long-time Nike executive, was named CEO on Thursday, reassuring investors about the potential for a turnaround at the company, which has faced challenges related to strategy missteps and fierce competition.

Following the announcement, Nike’s shares, which have decreased by 25% this year, rose by 8% in early trading on Friday.

Morningstar analyst David Swartz noted that Nike’s board, including the controlling Knight family, was looking for a leader with deep knowledge of the company to tackle recent challenges. These challenges included addressing the shift toward prioritizing direct sales over nurturing product development and retail partnerships.

John Donahoe, who previously held a role at eBay, took charge at Nike in 2020 with the goal of expanding its e-commerce presence and enhancing its direct-to-consumer division. This approach aimed to increase sales through Nike’s own channels while reducing reliance on traditional retailers.

However, this strategy proved miscalculated, allowing emerging brands like On Holding, supported by Roger Federer, and Hoka, owned by Deckers, to capture market share and retail space from Nike.

Earlier this year, Nike executives acknowledged that the direct-to-consumer approach was not delivering the anticipated growth and that the company was losing ground, particularly in the running category.

Art Hogan, chief market strategist at B. Riley Wealth, commented that while Donahoe was well-suited to lead the initial business model transition, consumer preferences changed post-pandemic, with shoppers seeking in-store experiences. This made the shift back to a more traditional retail approach more challenging.

Nike is looking forward to the upcoming Olympics to regain market share by promoting performance products like the Alphafly 3 racer and the Pegasus running shoe. The company is also planning to introduce new sneakers priced under $100 to attract budget-conscious consumers.

More details about Hill’s strategy are expected to be revealed during the company’s investor day in November. Oppenheimer analyst Brian Nagel stated that while Nike is unlikely to fully retract its direct-to-consumer push, the appointment of Elliott Hill as CEO signals a renewed focus on product innovation.