(Bloomberg) -- Phil Knight and other parts of the Nike universe lauded the hiring of Elliott Hill as the sneaker giant’s next chief executive officer, but good vibes alone won’t be enough to fix a company in turmoil.
Hill, a Nike veteran, is coming out of retirement to replace CEO John Donahoe, who is retiring after Nike’s robust growth disappeared. Mark Parker, Donahoe’s predecessor and Nike executive chairman, called Hill the “right person to lead Nike’s next stage of growth” and Knight, Nike’s co-founder, said he’s “exactly what’s needed at this moment.”
Nike has rarely experienced a time like this. Over the past 20 years, the company distanced itself from competitors like Adidas. But in June, it said annual revenue would decline, leading to biggest stock drop in its history. Analysts attributed the struggles to the lack of hot new products, a pullback from retail partners and rising competition — all problems that Hill must remedy.
“Hill will face the challenge of adapting to significant changes in the market, including heightened competition,” Randal Konik, an analyst at Jefferies, said in a note to clients, “and most critically, shifts in product innovation.”
Investors are optimistic that Hill is the right person to lead Nike’s revival efforts. Shares rose as much as 8.7% in New York on Friday. The stock had fallen 25% this year through Thursday’s close.
Hill will turn 61 before returning to Nike’s headquarters in Beaverton, Oregon, on October 14. He’ll live nearby in the Portland area.
Following the announcement on Thursday, some celebrations broke out on Nike’s campus as staff high-fived and hugged each other, according to an employee. Some staff popped bottles of prosecco. A mocked-up meme of Hill’s portrait as Barack Obama’s “Hope” poster has been circulating around the Nike community, a former executive said.
Top Nike executives considered Hill a vital component of the brand’s rise under Knight and Parker, working in numerous parts of organization throughout his 32-year tenure. Those who’ve worked with the Texas native describe him as a good listener who collaborates well, winning people over with his southern charm.
Decades at Nike
Hill started at Nike as an intern in Memphis in 1988, rising to oversee the retail and e-commerce businesses across different regions in the 2000s. He also ran the global retail segment, launching Nike’s franchised stores in China. In 2010, the executive took charge of Nike’s North America operations, boosting sales in the region by 60% over four years. Then he was promoted to president in a global role.
Over the years, Hill developed close relationships with Nike’s biggest figures, including Knight, Parker, and the company’s superstar endorser Michael Jordan, according to people familiar with the matter. At one point in his career, Hill helped convince Jordan to seek global expansion, even though the NBA legend had his doubts.
When Donahoe was hired in 2020, Hill led all commercial and marketing operations for both the Nike and Jordan brands. At the time, Hill had been considering retirement and told colleagues that he looked forward to relaxing at his house in Tuscany and biking the Italian countryside with his wife Gina. On the way out, Donahoe and his senior leadership team held a farewell dinner for him, and Knight was a surprise attendee.
During his retirement, Hill started a baseball club in Austin, served on the board of alma mater, Texas Christian University, and kept in touch with Knight — though they chatted less about sneakers and more about conference realignments in college sports.
Looming Shakeup
Company insiders expect a shakeup among senior leadership once Hill takes over. Other contenders for CEO were speculated to be Nike’s two presidents: Heidi O’Neill and Craig Williams. Former Chief Operating Officer Eric Sprunk’s name was also invoked, and many hoped Parker would retake his old job.
Nike is set to report its quarterly earnings results on Oct. 1, prior to Hill’s first day, but Wall Street is already looking to Nov. 19, when the company will host analysts for its investor day event.
Investors are looking for the new CEO to provide clarity on Nike’s path forward and whether it will continue to focus on direct-to-consumer channels instead of its retail partners. Under Donahoe, Nike downsized sales teams and ended relationships with more than half its wholesalers, creating an opening for competitors to move into those vacated spaces.
“The next step is working on their relationships with the partners — only after that can they really return to bear-hugging their customers,” said Simeon Siegel, an analyst at BMO Capital Markets.
Investors are especially keen on hearing Hill’s plans for speeding up product development, which slowed down under Donahoe’s watch. Sales of Nike’s lifestyle sneakers — such as Dunks, Air Force 1s and Jordan 1s — are sliding and the company hasn’t been producing the types of groundbreaking new products that Nike has long relied upon.
“We don’t believe Mr. Hill is considered a ‘product person,’” Jay Sole, an analyst at UBS, said in a note to clients. “The market may wonder if Mr. Hill has the right skill set to help Nike fix its product issue.”
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