Athletic equipment and sportswear giant Nike (NKE) is as big a name as there is in its chosen business.
It makes all sorts of shoes, uniforms, basketballs and related gear. Its best-known product is the Air Jordan line of basketball shoes. Golfer Tiger Woods and Nike were partners for 27 years.
But Nike's stock, a component of the Dow Jones Industrial Average, has limped this year as the company has struggled in the post-pandemic economy.
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Revenue in the most recent quarter fell 2%.
Shares for the day were flat at $80.98. For the year, Nike is down 25.4%. The shares have fallen more than 40% since peaking at $175.44 in the fall of 2021.
The Dow itself closed at a record 42,025 after a 522-point, 1.3% gain.
After hours, the company said it's making a change at the top, and Nike shares soared as much as 11% in response.
CEO John Donahoe, who has had the job since January 2020, is retiring as of Oct. 13. The retirement is by mutual agreement.
Donahue's successor is Elliot Hill, who had started at Nike at age 18 and worked for the company for 32 years until retiring in 2020.
A strategy failure leads to a change
Nike's struggles appeared to be tied to how it dealt with the pandemic. Donahoe championed a direct-to-consumer strategy, which worked only until the pandemic eased. Then, customers wanted to check out the goods at the store.
Business seemed to drag, and, by March, Retail Dive, a retail-oriented news site, reported that Donahoe conceded the direct-to-consumer strategy wasn't working. Nike, he said, needed to "make some important adjustments." By then, shareholder lawsuits were being filed.
So, lately Nike, which generated $51.3 billion in fiscal 2023-24, has been now rebuilding its relationships with wholesale vendors and retailers, embracing, as Donahoe put it, "a more balanced approach."
Now, the company and Donahoe agreed, someone good at working with wholesalers and retailers was better suited. The CEO will leave on Oct. 13 but will be a consultant until January.
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A veteran who understands product and marketing
Hill is well known within Nike and is close to board chair Mark Parker, a former CEO himself. Analyst Simeon Siegel of RBC Capital Markets told Retail Dive that Hill's arrival “breathes new life” into the brand.
His strengths are an excellent reputation inside Nike, Siegel noted, and a successful track record in product development and marketing that helped Nike build and maintain its dominant position in sportswear.
He has been director of the team sports division, vice president of U.S. commerce and president of geographies and sales.
His appointment was applauded by both Nike founder Phil Knight and Tim Cook, CEO of Apple (AAPL) , who is Nike's lead independent director.
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