Nike's Hill to return as CEO, Donahoe to retire; shares rise
Corrects time frame and amount in paragraph 9 to "Nike's annual sales are expected to fall to $48.84 billion for fiscal 2025" instead of "Nike's annual sales fell to $48.87 billion for fiscal 2025."
Hill's background includes 32 years at Nike, leading commercial and market operations
Donahoe's tenure included initial growth but recent sales pressure
Shares rise 8% in after-hours trading
Analysts and investors cheer return of Hill, expecting improved performance
By Juveria Tabassum, Nicholas P. Brown
Sept 19 (Reuters) -Nike NKE.N said on Thursday that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and CEO, as the sportswear giant shakes up its top rank amid efforts to revive sales and battle rising competition.
The company's shares rose 8% in after-hours trading.
Hill was at Nike for 32 years and held senior leadership positions across Europe and North America and was responsible for helping expand the business to more than $39 billion, the company said.
He was previously Nike's president, consumer marketplace, leading all commercial and market operations for the Nike and Jordan brands before retiring in 2020.
Nike said in a regulatory filing that Hill's compensation as president and CEO will include an annual base salary of $1.5 million. Hill will take over as CEO on Oct. 14.
Analysts cheered the move. The CEO change "gives a positive signal because it is someone that knows the brand and knows the company very well," said Jessica Ramirez of Jane Hali & Associates.
Donahoe was tasked with bolstering Nike's online presence and driving sales through direct-to-consumer channels.
The push initially helped the company build on the demand for athletic and leisurewear following the pandemic, resulting in Nike touching more than $50 billion in annual sales in fiscal 2023 for the first time.
However, sales have since come under pressure and growth has slowed, according to estimates compiled by LSEG. Nike's annual sales are expected to fall to $48.84 billion for fiscal 2025 as inflation-weary customers cut back on discretionary spending and China's market rebounds more slowly than expected.
A lack of innovative and appealing products has also tripped demand for Nike. Rival brands including Roger Federer-backed On ONON.N and Deckers' Hoka DECK.N are attracting shoppers and retail partners with products considered more fashionable and trendy.
Expectations for a change at the top were heightened after billionaire-investor William Ackman disclosed a stake in Nike. His Pershing Square Capital Management has continued to buy and now owns 16.3 million shares in Nike, a person familiar with the position said. Ackman was not immediately reachable for comment.
A person familiar with Ackman's thinking said that Hill would have been his top choice to replace Donahoe. Ackman, who announced his Nike stake via a public filing, had not been in touch with the company.
Hill's background as a former steward of Nike's valuable Jordan brand, a major profit-driver for the company, could also help the sportswear giant regain some momentum. The value of some Jordan shoes in 2023 had been slipping on the resale market as other sneaker brands, including On Running, experienced meteoric growth.
In the last couple of years, Nike had curtailed partnerships with retailers and pushed ahead with its plan to drive more sales through its own stores and websites. Those sales did not materialize and put the company on $2 billion cost savings route.
As part of the plan, Nike has so far cut jobs, reduced supply of classic shoes such as the Air Force 1 and tried to improve supply chain to boost margins.
"It clearly looks like Nike wanted to bring back somebody with a lot of experience" and "deep knowledge of Nike and its issues-- unlike John Donahoe, who came in without any experience in the industry," said David Swartz, senior analyst, Morningstar Research.
Hill will have to "work on repairing some of Nike's relationships" with retail partners who buy Nike shoes at wholesale, Swartz added. "Nike has dropped some customers over the years and pulled back some product and that has created some ill will towards Nike" among sneaker and footwear retailers, he said.
Thomas Hayes, chairman at Great Hill Capital, called Hill a “great pick.” Nike now needs to “innovate and repair relationships with wholesalers,” he added.
Nike’s $11 billion increase in stock market value in extended trade following the announcement late suggests how much investors value Hill.
By comparison, Starbucks’ value surged by $21 billion in one day after the coffee seller on Aug. 13 announced it hired away Chipotle Mexican Grill CEO Brian Niccol. Chipotle’s value fell by almost $6 billion on the same day.
Additional reporting by Ananya Mariam Rajesh in Bengaluru and Svea Herbst-Bayliss in New York; Editing by Shounak Dasgupta, Peter Henderson, Matthew Lewis and Anna Driver
Gerelateerde activa
Laatste nieuws
Disclaimer: De entiteiten van de XM Group bieden diensten en toegang tot ons online handelsplatform op basis van uitsluitend-uitvoering, waardoor een persoon de beschikbare content op of via de website kan bekijken en/of gebruiken, zonder dat dit is bedoeld voor wijziging of uitbreiding. Dergelijk(e) toegang en gebruik vallen onder: (i) de algemene voorwaarden; (ii) risicowaarschuwingen; en de (iii) volledige disclaimer. Dergelijke content wordt daarom alleen aangeboden als algemene informatie. Wees u er daarnaast vooral van bewust dat de inhoud op ons online handelsplatform geen verzoek of aanbieding omvat om transacties op de financiële markten uit te voeren. Het beleggen op welke financiële markt dan ook vormt een aanzienlijk risico voor uw vermogen.
Alle materialen die op ons online handelsplatform worden gepubliceerd zijn bedoeld voor educatieve/informatieve doeleinden en omvatten geen – en moeten niet worden beschouwd als het bevatten van – financieel, vermogensbelastings- of handelsadvies en aanbevelingen, of een overzicht van onze handelsprijzen, of een aanbod of aanvraag van een transactie in financiële instrumenten of ongevraagde financiële promoties voor u.
Alle content van derden, alsmede content die is voorbereid door XM, zoals opinies, nieuws, onderzoeken, analyses, prijzen en andere informatie of koppelingen naar externe websites op deze website worden aangeboden op een 'zoals-ze-zijn'-basis, als algemene marktcommentaren, en vormen geen beleggingsadvies. Voor zover dat content wordt beschouwd als beleggingsonderzoek, moet u zich ervan bewust zijn en accepteren dat de content niet bedoeld was en niet is voorbereid in overeenstemming met de wettelijke vereisten die zijn opgesteld om de onafhankelijkheid van beleggingsonderzoek te bevorderen en als zodanig onder de geldende wetgeving en richtlijnen moet worden beschouwd als marketingcommunicatie. Zorg ervoor dat u onze Mededeling over niet-onafhankelijk beleggingsonderzoek en risicowaarschuwing in verband met de voorgaande informatie doorneemt en begrijpt; die kunt u hier lezen.
