Nike Veteran Hill to Succeed Donahoe as CEO; Shares Surge – Reuters

By Juveria Tabassum, Nicholas P. Brown

Nike announced on Thursday that former senior executive Elliott Hill will return to the company as president and CEO, succeeding John Donahoe. This leadership change comes as the sportswear giant aims to revitalize sales and address growing competition.

Following the announcement, Nike’s shares surged by 8% in after-hours trading.

Elliott Hill has a long history with Nike, having spent 32 years at the company and holding various senior positions in Europe and North America, contributing to the business’s expansion to over $39 billion in revenue. Prior to his retirement in 2020, he served as president of the consumer marketplace, overseeing all commercial and market operations for the Nike and Jordan brands.

In a regulatory filing, Nike revealed that Hill’s compensation package as CEO will include an annual base salary of $1.5 million, with his official start date set for October 14.

Analysts reacted positively to the news, with Jessica Ramirez from Jane Hali & Associates noting that the appointment sends a favorable signal due to Hill’s extensive knowledge of the brand and the company.

During Donahoe’s tenure, he focused on enhancing Nike’s online presence and boosting sales through direct-to-consumer channels. Initially, this strategy succeeded in capitalizing on the demand for athletic and leisurewear that surged during the pandemic, allowing Nike to surpass $50 billion in annual sales for the first time in fiscal 2023.

However, sales have faced challenges recently, with expectations that annual revenue will decline to approximately $48.84 billion for fiscal 2025 as inflation affects consumer spending and the market in China slowly rebounds. A stagnant product lineup has also diminished demand, with competing brands increasingly attracting consumers with trendy options.

Speculation regarding leadership changes intensified after billionaire investor William Ackman disclosed a stake in Nike, with his firm acquiring 16.3 million shares. A source indicated that Hill was Ackman’s preferred choice to replace Donahoe.

Hill’s experience, particularly with Nike’s Jordan brand—an essential driver of profitability—could aid in regaining the company’s momentum. In recent years, the resale value of certain Jordan sneakers has dwindled, while other brands, such as On Running, have seen substantial success.

Nike has been reducing partnerships with retailers and focusing on driving sales through its own stores and online platforms. This strategy has fallen short, leading the company to pursue $2 billion in cost savings over the next three years, including job cuts and reduced supplies of classic products like the Air Force 1.

According to David Swartz, a senior analyst at Morningstar Research, it appears that Nike aimed to bring back someone with extensive experience and a deep understanding of the company’s challenges. Hill will need to rebuild relationships with wholesale partners that have been strained due to previous actions, such as cutting certain customers and limiting product supply.

Thomas Hayes, chairman of Great Hill Capital, described Hill’s return as an excellent decision, emphasizing the necessity for Nike to innovate and mend relationships with wholesalers.

Starting as an assistant in Nike’s Memphis showroom, Hill quickly advanced to sales roles, establishing significant connections with smaller sporting goods retailers. He contributed to launching new Nike products, building lasting relationships along the way.

Following the announcement of Hill as new CEO, Nike’s market capitalization increased by $11 billion in extended trading.