<span style="color: #a1978f;">Nike Inc. announced a number of leadership changes as well as job reductions as part of the recent launch of its Consumer Direct Acceleration (CDA) strategy largely designed to further drive digital engagement and growth.

In a statement, Nike said the changes in Executive leadership include:

  • Amy Montagne, former head of its global categories, becomes VP/GM, Men’s;
  • Whitney Malkiel, former head of its specialty businesses, becomes VP/GM, Women’s;
  • McCallester Dowers, former head of Nike’s North American Kids business, becomes VP/GM, Kids, globally;
  • Michael Spillane, formerly president, Categories & Product, becomes head of a new Consumer Creation division.

Amy Montagne, Whitney Malkiel and McCallester Dowers all report to Michael Spillane.

  • Carl Grebert, formerly VP/GM, APLA., becomes VP/GM, EMEA, succeeding Bert Hoyt, who will retire from Nike later in 2020 after 22 years with the company;
  • Sarah Mensah, VP/GM, Sportswear in APLA, succeeds Grebert as VP/GM, APLA;
  • Ann Hebert and Angela Dong will remain the VP/GMs, North America and Greater China geographies, respectively.

Carl Grebert, Sarah Mensah, Ann Hebert and Angela Dong all report to Heidi O’Neill, president, Consumer and Marketplace.

  • Craig A. Williams, president, Jordan Brand, and G. Scott Uzzell, president and CEO, Converse Inc., join Nike’s Executive Leadership Team reporting to John Donahoe, CEO.

The release also noted that operational model changes to fully align with the CDA is expected to lead to an unspecified net loss of jobs across the company resulting in pre-tax one-time employee termination costs of approximately $200 million to $250 million.

In a quick note on the announcement, Stifel’s Jim Duffy said he sees the changes as a continuation of leadership realignment since Donahoe took over as CEO at the start of the year. He said the moves fall in line with Donahoe’s past comments on the importance of streamlining the organization and accelerating decision making as well as the ambition to expand digital.

“Mr. Donahoe continues to put his imprint on the leadership team and structure,” wrote Duffy in the note. “We welcome the notable female representation in the flattened leadership structure and expect the consumer-driven segments (Men’s/Women’s/Kids) will result in better insights and allow focus to shift towards digital. The depth of NIKE experience from these leaders will certainly mitigate any transition pains and we expect minimal disruption to operations. These leadership changes are a clear move to emphasize NIKE as a digital-led consumer brand.”

Shares of Nike were flat in trading at $98.36 in early-afternoon trading Wednesday. Duffy has a “Buy” rating with a $111.00 price target.

<span style="color: #a1978f;">On June 25, Nike during its fourth-quarter conference call revealed a Consumer Direct Acceleration strategy designed to accelerate digital transformation; create a simpler consumer construct to better target Men’s, Women’s and Kids across categories; and unify technology investments.  Read more here.

“We are announcing changes today to transform Nike faster, accelerate against our biggest growth opportunities and extend our leadership position,” said Donahoe in a statement Wednesday. “Now is the right time to build on Nike’s strengths and elevate a group of experienced, talented leaders who can help drive the next phase of our growth.”

Also on June 25, Nike sent a memo to employees warning of layoffs as the company shifted its resources to invest in high-potential growth opportunities, including accelerated investments in digital. Read more here.

“We will soon be forced to make some difficult choices that will likely result in a net reduction of jobs,” Donahoe wrote in the e-mail. Donahoe wrote that the company does “not yet know how many jobs will be reduced nor who will be specifically impacted.”

Donahoe said in a statement to CNBC regarding the job reductions, “We are building a flatter, nimbler company and transforming Nike faster to define the marketplace of the future. We are shifting resources and creating the capacity to reinvest in our highest potential areas, and we anticipate our realignment will likely result in a net loss of jobs. Reductions are not being done for cost savings. Any savings will be reinvested into our priorities.”

The CDA launch and layoffs come as Nike reported fiscal fourth-quarter results that were hampered by COVID-19, although digital growth accelerated. Online sales skyrocketed 79 percent on a currency-neutral basis in the fiscal fourth quarter ended May 31, and Nike saw a nearly triple-digit acceleration in member digital demand.

Overall, the CDA plan targets three areas:

  • The marketplace of the future;
  • New consumer construct; and
  • End-to-end technology foundation.

Creating a marketplace of the future focuses on further melding digital and physical spaces. Donahoe told analysts on the fourth-quarter conference call that Nike’s vision is to create a “clear and connected digital marketplace” that drives “deeper and more meaningful” relationships with consumers.

The shift will accelerate online growth with the help of more digitally-engaged physical stores and both its own and select wholesale partners. Donahoe noted that Nike in fiscal 2018 set a goal to reach 30 percent digital penetration at both owned and partnered websites by fiscal 2023, up from 15 percent at the time, and it now expects to reach that goal during fiscal 2021. Nike now more firmly believes the overall business will eventually reach 50 percent digital penetration. Nike officials had made a similar prediction in late 2018.

<span style="color: #a1978f;">A major focus in creating a marketplace of the future will be on further interaction with Nike members across physical and digital. Donahoe told analysts, “As we look at opportunities to build deeper and more meaningful relationships with consumers, our vision is to create a clear and connected digital marketplace to match. Consumers want modern, seamless experiences, online to offline, so we’re accelerating our approach.”

The shift to a “new, simpler consumer construct” involves a realignment of its focus around three areas: Men’s, Women’s and Kid’s. Men’s-specific product accounted for 54.5 percent of Nike brand’s sales in fiscal 2020 with Women’s accounting for 22.9 percent and Kid’s, 14.4 percent.

“We know that our consumers don’t see themselves as only runners or yoga practitioners,” said Donahoe on the investor call. “They don’t think in terms of performance versus sportswear. Instead, we know how they shop across Men’s, Women’s and Kid’s.”

The shift will enable Nike to be “more specialized” in targeting consumers and, in particular, support reinvestment in its Women’s and Kid’s businesses.

Finally, the CDA program calls to an increased emphasis on building an end-to-end technology foundation to accelerate its digital transformation. Said Donahoe, “Simply put, we will more aggressively leverage technology to make Nike better.”

He added, “This single integrated technology strategy across our business will accelerate how we serve consumers. Specifically, we’ll speed up and unify our investments across demand sensing, insight gathering, inventory management, and more. This simplified approach will unlock more efficiency for the business while driving speed and responsiveness as we serve consumers globally.”

Photo courtesy Nike