The athletic shoe company will soon have a new CEO.
Nike (NYSE:NKE) stock was one of the biggest movers on Friday, as its price soared some 7% on the day.
The catalyst for the leading athletic shoe retailer was the news of a leadership change company.
Nike CEO John Donahoe is retiring and he will be replaced by Elliott Hill, a longtime Nike executive who is coming out of retirement in hopes of turning around the struggling shoe company.
Nike stumbles
Donahoe has been at the helm of Nike since January of 2020, coming on board just before the pandemic, and then heading into a period of historically high inflation. Since hitting $174 per share in November of 2021, Nike stock has steadily declined down to about $80 per share, before rising 7% on Friday to $86 per share.
Year-to-date, Nike stock is down about 19%, and that includes one of the stock’s worst days ever, when it plummeted about 20% following fiscal Q4 earnings on June 27.
Revenue fell 2% year over year in the quarter, which missed estimates, but it was the outlook that spooked investors. It called for fiscal 2025 revenue to decline in the mid-single digits when analysts had expected 2% revenue growth for the fiscal year.
A couple of issues that have hurt the company in recent years were a move away from wholesale retail partners, and higher expenses in the face of weakening demand. Donahoe had been in the process of correcting those problems, but the unexpectedly disappointing outlook likely precipitated the leadership change announced Friday.
“I would like to thank John for his contributions to Nike as President and CEO, and as a board member,” Mark Parker, executive chairman of Nike, said. “I would particularly like to recognize the role he played in leading the company during the COVID pandemic and his unwavering support for the investments Nike has made in our communities around the world.”
Hill comes out of retirement
The new president and CEO, Hill, is a 32-year veteran of Nike who was the president of Nike’s Consumer and Marketplace division before retiring in 2020. He will start his new job on October 14.
Parker cited Elliott’s “global expertise, leadership style, and deep understanding of our industry and partners, paired with his passion for sport, our brands, products, consumers, athletes, and employees,” as the reasons that he was selected.
“I’m eager to reconnect with the many employees and trusted partners I’ve worked with over the years, and just as excited to build new, impactful relationships that will move us ahead,” Hill said. “Together with our talented teams, I look forward to delivering bold, innovative products, that set us apart in the marketplace and captivate consumers for years to come.”
Donahoe will step down, effective October 13, but will remain as an advisor to the company through January 31, 2025.
“It’s been an honor and privilege to be part of this incredible company, and I’ll always value my time at Nike and the opportunity to lead the organization,” Donahoe said. “I have great respect for Phil, Mark, Nike and its employees. It became clear now was the time to make a leadership change, and Elliott is the right person. I look forward to seeing Nike and Elliott’s future successes.”
Nike reports its fiscal Q1 earnings on October 1, so investors will be eager to learn more about the strategic direction of the company under the new CEO.
