Nike appoints new CEO to face direct-to-consumer hurdles

Nike has announced a change in leadership, with Elliott Hill, a 32-year Nike veteran, taking over as CEO from John Donahoe. The board's decision was driven by the need to reverse a period of underperformance and regain innovation momentum at the sportswear giant.

Hill, who was previously Nike's president of consumer and marketplace, was favoured for his deep understanding of Nike's legacy and his ability to focus on core strengths such as performance products and premium pricing, while maintaining digital advances. This internal promotion contrasts with some peers who opt for outsiders to drive change, but reflects a strategic preference for continuity and brand alignment.

Under Donahoe's leadership, Nike shifted away from wholesale to direct-to-consumer channels, but saw flat or declining sales and lagging innovation, leading to its worst slump in over a decade. The company also undertook a $2 billion cost-cutting plan amid competitive pressures and slowing growth. Hill's mandate includes revitalising product creativity and organisational coherence to reverse this slide.

Recent performance indicators show signs of a strategic turnaround for Nike. Since Hill took over in October 2023, he has restructured leadership to centralise decision-making and emphasise agility, particularly focusing on underpenetrated markets like women's products. Analysts, including JPMorgan, have upgraded Nike's outlook, projecting multi-year earnings growth and margin recovery to pre-pandemic levels by 2028. The upcoming 2026 World Cup, part-hosted by the U.S., is also expected to boost sales, supporting the company's recovery narrative.

Nike has vowed to return to a better flow of product innovation and deliver "bolder" brand marketing. The company has also leaned back into some of its key partners and is embracing a more balanced approach to growing the business. This year, Nike has seen some of its hold on consumers slip as rival brands gain steam in the space.

Upon taking on the new role, Elliott Hill will become a member of the board of directors and the executive committee. He plans to deliver bold, innovative products that set Nike apart in the marketplace. Hill started working at Nike in 1988 and has expressed excitement about reconnecting with former colleagues and building new relationships.

John Donahoe, who is retiring from the company on October 13, will stay on as an adviser for Nike through January 31. In his farewell message, Donahoe acknowledged the company needed to "make some important adjustments" to its consumer direct acceleration strategy. Mark Parker, former chief executive and current Executive Chairman of Nike, thanked Donahoe for his contributions and expressed excitement at Hill's return to the brand.

A class action lawsuit earlier this summer took aim at Nike's consumer direct acceleration strategy, alleging that Donahoe and Chief Financial Officer Matt Friend misled investors about its success. Nike is switching chief executives amid a series of stumbles that have caused disappointing performance. BMO Capital Markets analyst Simeon Siegel believes Elliott Hill's arrival will breathe new life into the Nike brand.

In its most recent quarter, Nike's revenue fell 2%. The company is now looking forward to a new chapter under the leadership of Elliott Hill, with the hope of regaining its position as a market leader in the sportswear industry.