Nike shares swoosh higher after new CEO is named

Athletic equipment and sportswear giant Nike (NKE) is a major player in its industry, producing a wide range of products including shoes, uniforms, basketballs, and more. Its most famous line is the Air Jordan basketball shoes. Nike has also enjoyed a long partnership with golfer Tiger Woods, which lasted 27 years.

However, Nike's stock, part of the Dow Jones Industrial Average, has faced challenges this year as the company navigates difficulties in the post-pandemic economy.

Nike shares have fallen

In the most recent quarter, Nike reported a 2% decline in revenue. On the day, shares remained flat at $80.98, and for the year, the stock price is down 25.4%. Since hitting a peak of $175.44 in the fall of 2021, shares have dropped over 40%.

Meanwhile, the Dow Jones Industrial Average closed at a record 42,025, gaining 522 points or 1.3%. After hours, news of a leadership change at Nike prompted shares to surge as much as 11%.

CEO John Donahoe, who has been in the role since January 2020, will retire on October 13 by mutual agreement. His successor, Elliot Hill, began his career at Nike at age 18 and worked with the company for 32 years before retiring in 2020.

A strategy failure leads to a change

Nike's recent challenges appear to be linked to its handling of the pandemic. CEO John Donahoe promoted a direct-to-consumer strategy that initially succeeded but faltered as customers returned to physical stores after the pandemic eased.

Business struggled, and by March, Retail Dive reported that Donahoe acknowledged the strategy was ineffective, stating that Nike needed to "make some important adjustments." Around that time, shareholder lawsuits began to emerge.

In response, Nike, which generated $51.3 billion in fiscal 2023-24, has been working to rebuild relationships with wholesale vendors and retailers, adopting what Donahoe described as "a more balanced approach."

Recognizing the need for someone skilled in collaborating with wholesalers and retailers, the company and Donahoe agreed that a different leadership style was necessary. Donahoe will retire on October 13 but will remain as a consultant until January.

Elliott Hill to succeed John Donahoe as CEO of Nike

Hill is a familiar face at Nike and has a strong relationship with board chair Mark Parker, a former CEO. Analyst Simeon Siegel from RBC Capital Markets commented to Retail Dive that Hill's appointment “breathes new life” into the brand.

Siegel highlighted Hill's strong reputation within the company and his proven success in product development and marketing, which have been key to Nike's dominance in the sportswear market.

Hill's experience includes roles as director of the team sports division, vice president of U.S. commerce, and president of geographies and sales.

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