Hill, 60, originally joined Nike in 1988 and served as president of consumer and marketplace before he retired in 2020. He will take over on Oct. 14. Donahoe, 64, will retire and remain an adviser through January.
Downhill For Nike - Nike shares jumped more than 7% in extended New York trading. The stock has tumbled 25% this year as the sneaker giant struggles with falling sales and customer defections to upstart athletic brands such as On and Hoka, as well as to more established rivals like Adidas.
Investors will be looking for the new regime to speed up product development and release more of the groundbreaking sneaker technology that once defined the brand. The decision to bring back a longtime executive, rather than tap another outsider less-steeped in Nike’s culture of innovation, points to the company’s desperation in reversing a sales slump that has hurt shares, employee morale, and the brand’s global cachet.
Cost-Cutting - Donahoe came to Nike as only the second outsider to lead the company in its half-century corporate history. Parker, who was CEO for 14 years, helped recruit him as his successor with the hope that the former consultant could help infuse the brand with better technology and a more modern digital strategy.
Donahoe arrived at the Beaverton, Oregon, headquarters knowing very little about sneakers and streetwear. But he did know about cost-cutting.
His plan announced last year for $2 billion in cost reductions, along with layoffs across 2% of Nike’s workforce, dented morale and left employees questioning if Donahoe was the right person to meet the moment. He has been on the hot seat since Nike slashed its revenue forecast in December and warned in June that sales for the new fiscal year would be below expectations.
Demand was waning for the brand’s lifestyle sneakers as fewer people were shelling out for Nike Dunks, Air Force 1s and Air Jordan 1s. As Nike withheld products to prioritize its own stores, website and apps, relationships with retail partners also suffered.
The phased job cuts began in February, affecting corporate staff in Oregon and at other offices around the world. The company even fired people from its sneaker archive department, or DNA, as it’s referred to internally.
Calls From Wall Street - for a change in management at Nike grew louder after the sales warning in June, which led to the stock’s worst day since the company went public. Shares fell 20%, wiping out more than $28 billion in market value.
At the time, Nike co-founder Phil Knight released a statement backing his CEO: “I am optimistic in Nike’s future and John Donahoe has my unwavering confidence and full support,” he said.
Since then, Donahoe called on help from retired Nike executives. The company rehired Tom Peddie as vice president of marketplace partners to help mend the frayed retail relationships. It also reshuffled senior staff by moving longtime executive Thomas Clarke, the head of innovation, to an advisory role.
The company tried to change the narrative with extra marketing during the Paris Olympics, but sales didn’t bounce back. This month, Nike skipped its annual “Just Do It Day” celebration at its headquarters — an employee event that in the past has boasted guests such as Drake, Travis Scott and Serena Williams.
No comments:
Post a Comment