Embattled Nike (NKE) CEO John Donahoe has announced that he is retiring and leaving the sneaker and athletic apparel maker. He is being replaced in the top job by company veteran Elliott Hill.
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Donahoe, who has been Nike’s CEO since 2020, will retire from the company effective October 13. In a news release, Nike said that he will stay on as an advisor through the end of January 2025. Elliott Hill will takeover as Nike’s CEO on October 14 of this year.
The leadership change comes as Nike and its stock have struggled since the onset of the Covid-19 pandemic. Donahoe was widely blamed for a costly misstep that shifted Nike’s strategy to selling directly to consumers rather than through third-party distributors and retailers. NKE stock has declined 25% so far this year and is trading at $80.98 per share. The stock rose nearly 10% in after hours trading on news of the new CEO appointment.
Loss of Trust
Critics of Donahoe’s leadership say that, in a quest to advance sales at Nike’s branded stores and its corporate website, the company lost sight of innovation and failed to produce the types of sneakers the company had long been known for. Nike has also seen its market share eroded in recent years by upstart competitors such as Deckers Outdoor (DECK) and On Holdings (ONON).
At the same time, Nike has struggled with declining sales in China, where there has been a consumer backlash against American brands, and Nike in particular. In August of this year, it was revealed that activist investor Bill Ackman had taken a stake in Nike through his hedge fund, Pershing Square Capital Management, and was agitating for change at the company. Ackman owns roughly three million shares of NKE stock.
Is NKE Stock a Buy?
There is currently a consensus rating of Moderate Buy on Nike’s stock among 33 Wall Street analysts who track the company’s progress. The rating is based on 15 Buy and 18 Hold recommendations made in the last three months. There are no Sell ratings on NKE stock. The average price target of $92.12 implies 13.76% upside from current levels.
