Why Nike Stock Is Soaring
The sneaker company will soon have a new CEO.
Nike (NYSE:NKE) stock was one of the biggest movers on Friday, jumping nearly 7% on the day.
The turning point for the leading sneaker retailer was news of a management shakeup at the company.
Nike CEO John Donahoe is retiring and will be replaced by longtime Nike executive Elliot Hill, who returns from retirement in hopes of turning around the struggling shoe company.
Nike’s Stagger
Donahoe has been at the helm of Nike since January 2020, joining just before the pandemic and entering a period of the highest inflation in the company’s history. Nike’s stock has steadily declined since hitting $174 a share in November 2021, to around $80 a share, but rose 7% to $86 a share on Friday.
Nike shares are down about 19% this year, including its worst day ever, when the stock plunged about 20% after reporting fiscal fourth-quarter earnings on June 27.
Quarterly sales fell 2% year-over-year, missing estimates, but it was the outlook that surprised investors: While analysts had expected fiscal year sales to grow 2%, they had expected fiscal 2025 sales to decline in the mid-single digits.
Some of the issues that have hit the company in recent years have been the departure of wholesale retail partners and rising costs due to declining demand. Donahoe has been in the process of fixing these issues, but the unexpectedly disappointing outlook likely prompted the leadership changes announced Friday.
“I want to thank John for his contributions to Nike as Chairman and CEO and as a member of the Board of Directors,” said Mark Parker, Nike’s chairman. “I especially want to recognize his role in leading the company through the COVID pandemic and his unwavering support of Nike’s investments in communities around the world.”
Hill returns from retirement
Hill, the new president and CEO, is a 32-year Nike veteran who served as Nike’s president of consumer and marketplace before retiring in 2020. He will begin his new job on Oct. 14.
Parker cited Elliott’s “global expertise, leadership style, deep understanding of the industry and partners, and passion for the sport, brands, products, consumers, athletes and employees” as reasons for his selection.
“I look forward to reuniting with many of the employees and trusted partners I have worked with for many years, and I am equally excited to build new and impactful relationships moving forward,” Hill said. “I look forward to working with our talented team to deliver bold, innovative products that will differentiate us in the marketplace and engage consumers for years to come.”
Donahoe will step down on October 13, but will remain an advisor to the company until January 31, 2025.
“It has been an honor and privilege to be part of this incredible company, and I will always cherish my time at Nike and the opportunity to lead the organization,” Donahoe said. “I have tremendous respect for Phil, Mark, Nike and its employees. It became clear that now was the time for a leadership change, and Elliott is the right person. I look forward to the future success of Nike and Elliott.”
Nike is scheduled to report first-quarter earnings on Oct. 1, so investors will be eager to learn more about the company’s strategic direction under its new CEO.
