Nike said 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 9% 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 leisure wear 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 with LSEG expectations of Nike’s annual sales at $48.87 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 as rival brands including Roger Federer-backed On and Deckers’ Hoka attract customers 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.