Nike CEO John Donahoe announces his resignation

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Nike CEO John Donahoe is set to retire next month in a surprise leadership shakeup after a period of poor financial performance at the world’s largest sportswear maker.

Nike Inc. said Thursday that Elliot Hill, a company veteran who previously served as president of consumer market before retiring in 2020, will return to the top job effective Oct. 14.

Nike shares rose about 10 percent after the change was announced.

Donahoe, who previously worked at Bain Consulting and eBay, has been in the role since January 2020. He initially won praise for leading the brand through the coronavirus pandemic and accelerating its shift toward direct-to-consumer sales.

But in recent months, Nike has ceded market share to rivals including upstarts On and Hoka, and the company cut its outlook in June, prompting a dramatic sell-off in its shares.

“It is now clear that the time has come for a change in leadership, and that Elliott is the right person,” said Donahue, 64.

Hill, 60, a native of Austin, Texas, began his 32-year career at Nike as an intern before taking on sales roles and then leading all business and marketing operations for Nike and its Jordan brands.

Phil Knight, Nike’s co-founder and controlling shareholder, thanked Donahue for his service to the company. He said Hill’s expertise on the brand “was exactly what we needed at this moment. We have a lot of work to do but I look forward to seeing Nike get back to its former pace.”

Nike shares fell 20% in June after the company warned of slowing demand for its core products. It admitted that its strategy during the pandemic of emphasizing online sales, rather than Nike’s traditional mix of sales through retail and wholesale partners, was too aggressive.

Wall Street analysts had publicly questioned whether a former consultant and technology executive like Donahoe was the right leader for Nike, a legacy consumer brand. Under his leadership, the company hit its $50 billion annual revenue target last year. But Donahoe was seen as falling short of his targets. Product Innovation And develop newer, cooler shoes.

In June, Donahoe acknowledged that “last year was challenging” and spoke of “regaining our edge” — unusually backward language for a company that was the world’s leading seller of athletic shoes and apparel.

Over the course of Donahue’s tenure, Nike has pared back its relationships with retail partners that were the cornerstone of its sales force, opening up shelf space for smaller, hotter brands and traditional rivals like Adidas.

In March, Regis Schultz, CEO of retailer JD Sports, said Nike’s legacy sneaker franchises, including the Air Force 1 and Dunk, were getting tired, and that its main competitor, Adidas, was in high demand because of the many colors and patterns of the Samba shoe.

“This is fashion,” he said. “It’s not about finding new technology that will change the world. It’s about coming up with new designs… I think Nike has been slow, and they realize that.”

Donahue was the fourth person and only the second outsider to be selected to lead Nike in its more than half-century history. In selecting Hill to succeed him, the board chose a seasoned veteran who understands the company’s culture in an effort to restore the brand to its former strength.

“Elliot embodies the spirit of Nike and will bring his deep connection to sports, passion for our products, and competitive instincts to return the company to the top of its game,” said Tim Cook, Apple CEO and lead independent director of Nike’s board of directors.