Nike Inc. said Thursday that former senior executive Elliot Hill will return to the company as president and CEO, succeeding John Donahoe, as the sporting goods giant shakes up its executive ranks as part of an effort to revive sales and combat growing competition.
The company's shares rose 9% in after-hours trading.
Hill spent 32 years at Nike, holding senior management positions in Europe and North America and helping to grow the business to more than $39 billion, according to the company.
He previously served as Nike's president of consumer markets, leading all commercial and market operations for the Nike and Jordan brands until his retirement 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 welcomed the move, with Jessica Ramirez of Jane Harri & Associates saying the CEO change “is a positive signal that this is someone who knows the brand and the company well.”
Donahoe was tasked with strengthening Nike's online presence and growing sales through direct-to-consumer channels.
The initiative will initially help boost demand for sports and leisurewear after the pandemic, helping Nike surpass $50 billion in annual sales for the first time in fiscal 2023.
But sales have come under pressure and growth has slowed since then, as inflation-weary customers cut back on discretionary spending and the Chinese market recovers more slowly than expected. LSEG now sees Nike's annual sales of $48.87 billion in fiscal 2025.
A lack of innovative, compelling products is also dampening demand for Nike, as rival brands such as Roger Federer-backed On and Deckers' Hoka lure customers with products that are considered more fashionable and trendy.
Hopes of a leadership change have risen after billionaire investor William Ackman revealed he owns Nike stock. His Pershing Square Capital Management firm has continued to buy Nike shares and now owns 16.3 million shares, according to a person familiar with the matter. Ackman couldn't immediately be reached for comment.
A person familiar with Mr. Ackman's thinking said Ms. Hill was the leading candidate to succeed Mr. Donahoe. Mr. Ackman disclosed his Nike stake in public filings but had no contact with the company.
Hill's background as a former steward of Nike's prized Jordan Brand, a major driver of profits, could also help the sportswear giant regain momentum. The value of some Jordan shoes on the secondhand market has fallen in 2023 as other sneaker brands, including On Running, have boomed.
Nike has pushed ahead in recent years with plans to scale back partnerships with retailers and boost sales through its own stores and website, but the sales never materialized, leading the company to embark on a $2 billion cost-cutting initiative.
As part of its plan, Nike has been cutting jobs, reducing supplies of staple shoes like the Air Force 1 and improving its supply chain to boost profit margins.
“Nike was clearly looking to bring back someone with a wealth of experience and deep knowledge of Nike and its issues, as opposed to John Donahoe, who had zero industry experience,” said David Schwartz, senior analyst at Morningstar Research.
Swartz added that Hill “needs to work on repairing relationships” with retail partners who buy Nike shoes wholesale. “Nike has lost customers and withdrawn some products over the years, which has created animosity toward Nike among sneaker and footwear retailers,” he said.
Thomas Hayes, chairman of Great Hill Capital, called Hill “an excellent choice.” Nike now “needs to innovate and repair its relationships with its wholesalers,” he added.
Nike's market capitalization increased by $11 billion in trading following the announcement, a sign of how highly investors think of Hill.
By comparison, the value of coffee retailer Starbucks soared by $21 billion in one day on Aug. 13 after it announced it was poaching Chipotle Mexican Grill CEO Brian Niccol. Meanwhile, Chipotle's value fell by nearly $6 billion on the same day.
