Elliott Hill is returning to Nike, this time as chief executive.
Credit...Nike

Nike C.E.O. John Donahoe Abruptly Retires Amid Declining Sales

Elliott Hill, an executive who left the company after Donahoe’s appointment in 2020, will return as chief executive, Nike’s board said.

by · NY Times

Nike’s board announced the abrupt retirement of its chief executive, John Donahoe, on Thursday, amid merchandising struggles and a falling stock price. Elliott Hill, who retired from the company in 2020, will return as a chief executive next month.

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

Mr. Donahoe, the company’s chief executive since January 2020, helped navigate Nike through the disruption of the Covid-19 pandemic, the growth of e-commerce and supply chain bottlenecks. But he wasn’t seen as an innovator and marketer, key qualities in a company that combines performance and style.

Mr. Hill spent more than 32 years with the shoe brand after starting as an intern in 1988. During his tenure he worked across departments and in both North America and Europe. Before retiring he oversaw commercial and marketing operations for Nike and the Jordan Brand.

Over the past few years, Nike had become more focused on building direct selling channels rather than developing new products, analysts say.

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.

“Nike is known for its storytelling. When the primary focus becomes on going direct as opposed to telling these stories, some of that magic falls behind,” Siegel said.

Mark Parker, the executive chairman of Nike and who served as chief executive before Mr. Donahoe, said the board had conducted a “thoughtful succession process.”

In a statement, he called Mr. Hill the “right person to lead Nike’s next stage of growth.”

Following the announcement, Nike shares jumped about 10 percent in aftermarket trading.

Nike’s stock has fallen 24 percent so far this year to about $81 a share at the close of Thursday’s session, and is well off its high of $177 that it hit in November 2021.

A big chunk of the recent losses in the stock occurred in one day in late June when the stock dropped 20 percent after the company surprised Wall Street analysts and investors with a forecast for revenue decline.

North America, Nike’s largest market, accounts for 40 percent of the company’s revenues. In the last fiscal year, which closed at the end of May, North American revenue fell, in part because of a decline in shoe sales. Nike has also increasingly been facing competition from a wave of newer brands, such as Hoka, which is owned by Deckers Brands, and On.

As part of a three-year plan to slash costs of $2 billion, Nike this year has also laid off more than 700 employees at its headquarters in Oregon, or about 2 percent of its global work force.

The cuts, especially those at higher leadership levels, have led some analysts to question whether Nike was forcing out key, experienced personnel.

In a statement, Phil Knight, Nike’s co-founder, thanked Mr. Donahoe for his time with the company. Mr. Donahoe will remain as an adviser with the company through January.

Mr. Donahoe said he valued his time with the company, noting that Nike needed a new leader at the top.

“It became clear now was the time to make a leadership change, and Elliott is the right person,” he said in a statement. “I look forward to seeing Nike and Elliott’s future successes.”

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