Nike just did it: It replaced its CEO in the nick of time
Subscribe to enjoy similar stories. Nike Inc, the sneaker-maker, has gone and done it. Last week, it parted company with Chief Executive Officer John Donahoe and replaced him with Elliott Hill, a longtime Nike executive who had retired in 2020.
Hill is a company veteran who should be able to reconnect with staff and retail partners. But with the depth of the decline over the past two years, a raft of sportswear upstarts nipping at Nike’s heels and Adidas CEO Bjorn Gulden proving himself to be an accomplished and nimble merchant, it won’t be quick or easy to get the $50 billion giant back on track. It is surprising it took Nike so long to acknowledge the need for change.
Donahoe’s position was looking increasingly untenable. With the company’s performance sliding and the shares down 25% this year, unusually, change at the top was being openly discussed. Last month, Bill Ackman’s Pershing Square Holdings Ltd disclosed a $229 million stake.
The root of the current problems can be traced back to Donahoe’s strategy, after his appointment in 2020, of trying to turn Nike into a combination of a tech powerhouse and luxury brand. Initially, it worked. In June 2021, the shares soared to a record high as Nike projected that its sales would surpass $50 billion for the first time.
But prioritizing Nike’s own websites and stores and cutting back the supply of products to retailers, such as Foot Locker Inc, left gaps on shelves that were filled by rivals. That includes Adidas and New Balance, but also a host of challenger brands such as On Holding and Deckers Outdoor’s Hoka. Meanwhile, Nike’s sneaker hit factory stalled.
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