At Nike, a veteran laces up his cleats again; action ignites
John Donahue, the CEO of Nike whose strategy had been blamed for the poor performance of the stock in recent months, is stepping down.
To replace him, Nike turned to a veteran with over 30 years in the company. Elliott Hill will come out of retirement and take over as CEO on October 14th.
The news, which came out after the market close, caused the stock to jump 10% in the after-hours.
Shares of the sports products brand ended the day with a 24% loss for the year – at a time when American markets are hitting historic highs.
Much of the drop occurred in June, after the company provided outlook below expectations.
Donahue has been in charge since January 2020. Since then, sales have jumped from $37 billion to $51 billion last year. However, this year, they are expected to drop to $49 billion.
According to the Wall Street Journal, investors have been questioning the executive’s decision to prioritize classic lines and models over investing in innovation.
“The company now faces difficulties in maintaining its position in the market, with consumers buying less from Nike and more from competitors like Adidas and New Balance,” said the WSJ.
Startups On Running and Hoka also grabbed a considerable share of a more trendy audience, previously loyal to the American brand.
Sales have been declining, and the company is going through a restructuring. There will be an estimated 2% reduction in staff and a $2 billion cost reduction.
Hill, who was president of the consumer and market division, retired in 2020. He has been working at Nike since the late 80s, when he started as an intern.
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Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.