Nike Shares Rise on Leadership Shakeup

Nike shares soared on Friday as investors reacted positively to news of a leadership change at the global sportswear giant, signaling hopes for a potential turnaround in the company’s fortunes. Elliot Hill, a Nike veteran who retired in 2020 after leading the company’s commercial and marketing operations, will replace current CEO John Donahoe, effective October 14. Hill’s return is seen as an opportunity to reverse the sluggish performance of Nike’s stock, which has struggled under Donahoe’s leadership since he took over in January 2020. The announcement, made late Thursday, sent Nike’s stock surging by as much as 8.7%, reaching $88—its highest intraday price since June. By late morning, the gain had moderated to around 6.5%, but the stock was still on track for its best single-day performance since September 2023.

Under Donahoe’s leadership, Nike’s stock has underperformed, falling 16.5% compared to an 87.3% return for the S&P 500 during the same period, according to FactSet data. Even though the broader sportswear market has been challenging, with competitors like Adidas seeing a 26.6% decline and Lululemon posting only a modest 10.4% gain, Nike’s struggles have been particularly pronounced. Donahoe, who previously led ServiceNow and eBay, took over Nike in the early days of the pandemic, but his tenure has been marked by stalled profit growth, declining sales in key markets, and a perceived decline in Nike’s brand reputation.

Analysts have pointed to several reasons for Nike’s struggles in recent years. While broader market challenges, such as increased competition and supply chain issues, have played a role, many have criticized Donahoe’s leadership style. A Bloomberg article recently dubbed Donahoe “The Man Who Made Nike Uncool,” underscoring how his approach to cutting ties with retail partners and reducing the company’s focus on product innovation has hurt the brand. Donahoe’s background outside of the sports and product sectors has also been a point of criticism, with analysts suggesting that his lack of experience in these areas contributed to Nike’s declining fortunes.

Elliot Hill’s appointment is widely seen as an opportunity to refocus Nike on its core strengths: innovation and strong retail partnerships. Bank of America analyst Lorraine Hutchinson highlighted Hill’s familiarity with the company and his background in marketing and commercial operations as key factors that could help Nike regain its competitive edge. Hill will face significant challenges in his new role, including overseeing efforts to rejuvenate product innovation, rebuild wholesale relationships, and boost sales. Nike is projected to report a 4.8% decline in revenue for its fiscal year ending in May 2025, marking its first year-over-year drop since 2010 (excluding the pandemic-affected 2020). The company is also expected to report a 21.8% decline in profits, further highlighting the difficulties it faces.

Despite the challenges, investors are optimistic that Hill’s leadership could spark a turnaround for the company. His deep understanding of Nike’s operations and the broader sportswear market makes him well-suited to guide the company through its current struggles. However, the road to recovery will not be easy, and analysts caution that it will take time for Hill to make a meaningful impact. Still, the market’s initial reaction to the leadership change suggests that investors are hopeful that a new CEO will bring fresh energy and a renewed focus on what made Nike successful in the first place.

As Hill prepares to take over, all eyes will be on his ability to navigate the significant challenges facing Nike. The company’s stock is still more than 50% below its peak in 2021, and it will take considerable effort to regain lost ground. However, with Hill at the helm, investors are hopeful that Nike can once again become a leader in the sportswear industry. His experience and understanding of Nike’s unique position in the market give him the tools needed to steer the company in a more positive direction. The coming months will be critical as Hill works to restore Nike’s brand reputation, reignite product innovation, and rebuild relationships with retailers and customers alike.