Former Executive Who Served for 32 Years Takes New Leadership Role
Nike, which is facing a crisis due to recent sales slowdown and stock price decline, has made a leadership change. A veteran executive who retired after 32 years at Nike has stepped in as a savior. Following this news, the stock price jumped about 8% in after-hours trading, reflecting the market's enthusiasm.
On the 19th (local time), Nike announced that CEO John Donahoe will resign effective next month on the 13th, and Elliott Hill will take over the new leadership. Hill will also serve as a director on Nike's board and a member of the executive committee. Although CEO Donahoe will step down from day-to-day management, he plans to remain as a company advisor until January next year to assist with the transition.
Hill expressed his aspirations, saying, "I have had the honor of working with the best people in the industry for 32 years, and now I am ready to lead Nike into a brighter future. I look forward to delivering bold and innovative products that will captivate consumers for years to come." Hill is a veteran who dedicated 32 years to the company, starting as an intern at Nike and rising to president of the Consumer and Marketplace division, overseeing all commercial and marketing operations for the Nike and Jordan brands.
CNBC reported, "Hill was quite popular among employees until he left Nike in 2020." Nike Chairman Mark Parker also praised him, saying, "Hill is the right person to lead Nike's next phase of growth."
Like Starbucks, which replaced its leadership to escape the slump in recent performance, Nike is also in urgent need of a turnaround. Nike's fiscal 2024 fourth-quarter (March to May) sales were about $12.6 billion, down nearly 2% year-over-year. This is due to a 4% drop in shoe sales, which account for 68% of the company's revenue, amid high inflation and intense competition.
The Wall Street Journal (WSJ) described it as "the worst performance in 20 years, excluding the first year of the COVID-19 pandemic and the 2008-2009 financial crisis." Additionally, the stock price has plummeted 25% so far this year, and a 10% sales decline is forecasted for the first quarter of fiscal 2025 (June to August 2024).
David Schwartz, senior analyst at Morningstar Research, commented, "Nike has severed relationships with wholesale partners over the years, and among shoe retailers who used to carry Nike products, there has developed some resentment toward Nike. It seems Nike wanted to bring back someone with extensive experience and expertise to restore these relationships."
Jessica Ramirez, senior research analyst at Jane Harley & Associates, said, "Nike is struggling with low morale, and appointing Hill, who deeply understands the corporate culture amid organizational turmoil, is a positive sign."
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