Not since ET, the Extraterrestrial has the return of someone named Elliott created the amount of excitement Nike, inc. generated on Thursday, September 19 when the company’s Board of Directors named former Nike executive Elliott Hill as the next president and CEO of the largest sporting goods company in the world, effective October 14. The move was accompanied by news that the Board and current CEO John Donahoe “have decided he will retire” from his role as president and CEO, and from the Nike, Inc. Board of Directors, effective October 13. (See link for full story at bottom).
The news of Hill’s return was met with comments of “great guy,” “the right person to fix it,” and suggestions this may be the start of a larger movement of former employees returning to right the ship and ensure a credible succession plan is in place across the enterprise for the future.
Taking the pulse on Wall Street and in the active lifestyle market finds a group of people pleased with the move even as the company has otherwise been a picture of stability in the corner office with only three CEO’s in its history, matching the NFL’s Steelers for the fewest number of head coaches in the Super Bowl era. But that team has proven that the metric doesn’t necessarily win you Super Bowls and may only ensure a record of non-losing seasons. The sense here is that the Nike team, and team owner Phil Knight, want to win.
Some Wall Street analysts whose updated forecasts and prognostications made after Tom Peddie came out of retirement to help the mother ship (see Peddie article link at bottom) proved to be right on the money. And it only took two months for it to come to fruition.
NKE shares were flat for the day on Thursday, up just 0.10 percent for the day while the Dow was up over 500 points, and after a tough 3-month period where NKE shares were down 14.6 percent through September 19 and down more than 25 percent year-to-date. Shares were up overnight, rising in the mid- to high-single digits in early trading Friday.
“We do not believe a major directional change for the business is imminent,” said Williams Trading Analyst Sam Poser in a research note out on Thursday, September 19. “It will be 15-18 months at the minimum, now that a new CEO is in place, until true product and brand evolution would be realized, leaving us at spring 2026. Although, we do believe that the mojo on the Nike campus and throughout the organization will be palpable tomorrow morning.”
Poser said that former Nike employees with whom his firm had spoken, and senior executives at large retailers willing to talk, have nothing but positive things to say about Elliott Hill.
“We continue to believe that the stock price will increase ahead of change in the business,” Poser said in his note. “Now that Mr. Hill is in place, we would not be surprised to see others who were retired in recent years to rejoin Nike, and bring back some needed institutional knowledge.”
He said they (Williams) now believe that Nike will have a credible plan to lay out at their Investor day in mid-November.
Poser was a bit of a fortune teller in a mid-August note to investors when he upgraded NKE shares to Buy from Sell and raised his Price Target (PT) to $93 from $67 per share.
“It is not that we believe a major directional change for the business is imminent, but rather that the recent rehire of Tom Peddie, as the VP of Marketplace Partners (AKA: The head of U.S. wholesale) indicates that change is brewing,” Williams said in its note dated August 16.
Active lifestyle industry advisor Matt Powell said he believes Elliott Hill is the perfect choice to get Nike back on the right track. “He knows the business from the ground up, and was there in the tough times,” Powell commented. He went on to say that Hill is widely respected both inside and outside the berm.
See more commentary from Matt in his latest Sneakernomics post on LinkedIn here.
At Citi Research, the investment research team, led by Paul Lejuez, said in a Thursday note that they viewed Hill as one of the best-case scenarios to lead Nike back to its former roots and culture of success.
“While investors widely anticipated a change in leadership, many feared an internal hire to replace Donahoe would not be enough to instill confidence that their current product/realignment strategy would be effective,” Citi wrote in its note. “Mr. Hill represents the best of both worlds – an external hire who also brings decades of experience and relationships from his previous tenure at the company.”
They went on to say that with a new, “well-liked leader” in place, they expect investors to place less focus on weaker near-term trends/potential earnings risk from a weakening China macro backdrop and product reset in that market, and instead focus more on the potential timing/magnitude of a brand turnaround.
“A big question is whether Hill is committed to NKE’s current innovation pipeline/product realignment strategy or whether he plans to move in a different direction (we believe his sales/marketplace background suggests the former),” the Lejuez team wrote.
Citi did call into question whether the November Analyst Day could, or would, proceed as planned.
“It wouldn’t be enough time for any new strategies to be viewed as credible and well-thought-out,” Citi suggested. “We believe it is likely the analyst day will be postponed until the Spring (at the earliest).”
The Citi team also thinks the lack of a Q1 pre-announcement in conjunction with the CEO announcement suggests Q1 results are likely to be in-line or better than plan.
“However, with several companies over the past week signaling further weakening of the macro in China (driving excess inventory/elevated promos across the market), there is potential risk of mgmt updating F25 guidance to reflect a weakening China macro when they report on Oct 1,” Citi said. (see more coverage on Nike and its China retail business at bottom.)
“However with today’s announcement, we believe NKE is more likely to get a pass on a weakening China macro, particularly if NAM/EMEA are performing in-line w/plan,” Citi team noted.
Baird and Senior Research Analyst Jonathan Komp expects the CEO move to be widely celebrated given Hill’s strengths spanning product, people/teams, and channel/marketplace strategies. Komp said that early feedback they had collected from current/former colleagues is bullish on Hill’s product acumen and team/culture focus.
“While near-term financial implications following a CEO change are less clear (reset always possible), we are more optimistic about Nike’s multi-year earnings and 6-12+ month outlook for the stock,” Komp commented in a Thursday evening note.
“We expect Hill’s appointment to have an immediate positive impact on investor sentiment and internal morale across the organization where we believe Hill remained held in very high regard,” Komp noted. “Founder/Chairman Emeritus Phil Knight commented ‘His (Hill’s) experience, understanding of Nike and leadership is exactly what’s needed at this moment. We’ve got a lot of work to do but I’m looking forward to seeing Nike back on its pace.'”
Baird upped its PT to $110 per share from its earlier $100 price target.
Telsey Advisory Group (TAG) Analyst Christina Fernandez noted that Nike’s sales trajectory had deteriorated in recent quarters, and it had become clear that it was time for a leadership change.
“We believe the CEO transition will be welcome by investors and expect the stock to react positively,” Fernandez wrote in a Thursday note. “While Mr. Donahoe led a phase of strong growth for Nike during FY21-23, sales growth began to slow a year ago as the company fell behind on introducing new products to the market. Nike also has made a pivot in its strategy and is leaning back on wholesale partners after prioritizing its own direct-to-consumer channels for some time. In choosing Mr. Hill, Nike made a safe choice and is returning to the leadership style that has worked before—someone with deep knowledge of the athletic footwear and apparel industry, who knows and understands the corporate culture, has bonds with leaders and employees across the organization, and can rebuild relationships with partners.”
TAG said that, overall, Nike is in a period of transition and a return to growth could take a few quarters to play out.
“We see the leadership change as a step forward in investors regaining confidence that Nike can right the ship and return to growth,” Fernandez offered. “Despite what we expect to be a tough 1HF25 with 1QF25 revenues guided down HSD, we see reasons to stay positive on the stock and Nike’s turnaround.”
She said product introductions are increasing over the next few years, with positive initial responses to launches like Pegasus 41, and that key retail partners, like Dick’s Sporting Goods and Foot Locker, have expressed excitement around Nike’s product pipeline with order books running up DD for Spring 2025 led by Pegasus 41. Fernandez also said Nike is seeing strength in performance, led by basketball and football, and the company has a rich product archive it can tap for lifestyle products.
Stifel Managing Director Jim Duffy said he and the Stifel team are encouraged to see a long-time Nike insider return to the CEO role and noted that they saw recent underperformance as a direct result of losing focus on what has made Nike great for so many years.
“Under Mr. Hill’s leadership, we hope to see a revitalization of the Nike culture (the good parts) and a renaissance in innovation and design,” Duffy wrote in a Thursday note. “With CEO change, however, investors should expect 1) a further reset to financial forecasts, 2) additional shake-up of executive leadership, and 3) a prolonged period of product revitalization.”
He said the CEO change “purposefully” comes ahead of a November Investor Day that will present the go-forward economic model.
“Notably, this model may feature lower growth ambitions and lesser returns than the precedent model, which supported the historical multiple premium,” he said. “While the stock is lifting on the news of leadership change, we expect follow-through is limited and reiterate our HOLD rating.”
Some of the reticence may come from concerns that Hill is inheriting a turnaround that has yet to show momentum.
“Since 2020, Nike has underperformed the industry and results in the past two years have been particularly uninspiring (five downward revisions to consensus estimates in the past six quarters), Stifel said.
Duffy also noted that Nike is historically deliberate about succession planning and proactively rotates executives between roles to develop talent, suggesting a period of continued talent shifts internally as others have commented about “putting the band back together.”
“Similar to previous organizational shifts with changes to the CEO role and ahead of Investor Days, we expect further changes to the leadership structure,” he wrote.
Jim Hartford, chief market analyst, SSI Data, LLC, suggested that the excitement about the change at CEO will be somewhat short lived, but very much needed for the Nike business as it plots a recovery path.
“Let’s just say, the appearance of a crowd with torches at the November Analyst Day is far less likely than before this [CEO] announcement,” added Hartford.
“This is going to take someone that knows the market and the inner workings of the company,” Hartford noted. “There is no one-year training period here but Elliott (and the brand) will certainly have a honeymoon period. For how long, that remains to be seen.”
Hartford went on to say that the market has clearly shifted since Hill retired in 2020, shortly after Donahoe’s appointment, and he will need to be a quick study on the changing landscape if he hasn’t been engaged in the market in recent years.
“We see new running brands entering the specialty market far more frequently than at any period in the past 40 years,” said Hartford. “Most will use running as an entry into the performance business and expand from there, utilizing the On, Hoka, (and Nike) model to build their brands. Elliott brings a tremendous marketplace resume to the job, and that will be needed from day one, but he will also need to focus on the innovation pipeline that has broken down in recent years and let so many new brands into the pipeline and into the conversation.”
One thing Hartford said is important to remember is that the Nike brand was built on the backs of the product it brought to market, obviously supported by some of the best marketing the active lifestyle market has ever seen, but it should be noted those first 56 years the company was under the tutelage of the team’s first two coaches – and they came from or focused their energy on the product side. Mr. Hill will need to use the other side of his brain for a solution here and may also lean heavily on Mr. Parker and Mr, Knight.
Image courtesy Nike, Inc.
For additional SGB Media coverage of the changes at Nike, Inc., see below:
EXEC: Nike Putting the Band Back Together as Elliott Hill Named CEO, Effective Oct. 14
EXEC: Nike and Adidas’ China Retail Partner Warns of Fiscal H1 Sales and Profit Decline
EXEC: Tom Peddie Returns to Nike as VP of Marketplace Partners
