Nike's New CEO Elliott Hill To Focus On Repairing Retailer Relations
Nike Inc. (NYSE:NKE) has appointed company veteran Elliott Hill as its new CEO, aiming to rejuvenate sales by mending ties with retailers.
What Happened: Hill’s appointment comes as John Donahoe steps down after a tenure focused on direct-to-consumer sales. This strategy, which emphasized selling through Nike’s stores and website, faced criticism for sidelining retail partners like Foot Locker and Macy’s, Reuters reported on Friday.
Under Donahoe, Nike’s shares have dropped by 25% this year. However, the announcement of Hill’s leadership saw a 6% surge in premarket trading on Friday, signaling investor optimism.
Morningstar analyst David Swartz noted that Nike’s board, including the controlling Knight family, sought a leader with deep company knowledge to address recent challenges, particularly the strained retailer relationships.
Nike aims to regain market share, especially in the running category, by spotlighting performance products and introducing new budget-friendly sneakers. A detailed strategy from Hill is expected at the company’s investor day in November.
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Why It Matters: The leadership change comes at a crucial time for Nike, which has been grappling with a series of challenges. Earlier this year, Nike’s fourth-quarter results highlighted ongoing struggles, with shares plunging more than 12% in after-hours trading. Despite being the top sponsor at the UEFA Euro 2024 football tournament, Nike’s lack of innovation and quality storytelling has hurt its performance. The company also lowered its full-year sales outlook, rattling stocks of retail partners like Foot Locker and Dick’s Sporting Goods.
Nike’s strategy to shift away from wholesalers to direct sales channels has contributed to its sales slump. However, key retail partners have expressed optimism about Nike’s upcoming product launches and innovations. Foot Locker noted that Nike is “clearly back to playing offense.” For the quarter ending May 31st, Nike reported a 2% revenue decrease to $12.61 billion.
Price Action: At the time of writing, Nike was up by 8.36% in the pre-market on Friday, as per Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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