Yahoo Finance

Breaking news that Nike CEO John Donahoe is out. He will be replaced by Elliot Hill. Hill also will become a director of the Nike board of directors and a member of the executive committee. Now, Elliot Hill had been with Nike previously, I believe. So he is what we like to refer to informally as a boomerang here. Donahoe had been having some issues at Nike in recent years. There had been some sort of back and forth about Nike's relationship with wholesale channels versus its direct-to-consumer business. As of late, there had been more concerns over Nike's pace of innovation and that it's sort of very dominant role in the sneaker space had been flagging to some degree. So that is sort of the backdrop here for this now management change that we are hearing about today with the stock down 25% year-to-date. That's what's going on.

Yeah. We've talked to any number of analysts on the show, Julie, who've talked about this name. It is deep in the red this year. It's in the red over the last 12 months. I'm just looking at, so we've heard comments about, you know, critiques of management, critiques of innovation, but clearly big shake-up here in the C-suite.

And for more, to talk more about this, it just so happens that our executive editor Brian Sozzi's still in the office. He has covered Nike pretty extensively.

Yeah.

Okay, well here we go.

Do we just grab you on here? Did you even have you had a chance to look?

Yeah. Okay.

I ran over here in my white Boss sneakers, which I think is very telling, and in the green room, I have a pair, a couple pair of On sneakers. On running. I'm sure you have Nikes as well.

Oh.

But this speaks to no, actually, I really have gotten rid of a lot of them because I think that speaks to part of the reason why John Donahoe will go down as probably the worst CEO in Nike's history. I mean, there hasn't been many of them. We had Phil Knight, Mark Parker driving the company for many, many years, and I don't find, I don't think it's any small coincidence that Mark Parker is the main man listed at the top of this press release detailing Nike here. Bottom line is, Donahoe ruined a lot of relationships with the likes of Foot Locker and many other companies. He has overseen Nike during a time when On Running and a lot of upstarts in the training space have gobbled up market share from the company. He has continued to dump a lot of old school Nike sneakers on the marketplace that nobody cares about anymore or not caring about them to the extent that they used to. And what do you get over the past five years? According to Yahoo Finance data, stocks down 8%. Not surprised to see Nike shares up 8% here. I, overall, the takeaway is this, their Nike is going back to the well to someone that has the deep relationships, the deep partnerships, respects the history of Nike. That's what you're getting here in the new incoming CEO of Nike, and I think that's why they did this. And this, we saw this, essentially, all the writing on the wall. The stock is under pressure, you have Phil Knight and his son on the board, they're losing massive wealth. What has happened to Nike is absolutely embarrassing. It has been time for change. You've seen a lot of media folks, a lot of our competitors really get on John Donahoe in the past month. I think the FT just dropped a story a week and a half ago. I'm not surprised at all.

What, what are the new levers though that the new CEO then, Sozzi, has to pull here?

Make better stuff. And I think if you talk to a lot of, really, it's innovation, bring back quality to what Nike's making. I think they've over diversified their supply chain and the quality of products are just not where they used to be. But where they don't have an answer for is the rise and some of these upstart brands. We followed On Running, the co-founders there from Hoka, Hoka. You followed Hoka and have been on the Hoka story from day one over at Deckers. Massive market share in running, On, massive market share in running. And it's unclear how Nike gets that customer back for whatever reason. Consumers have gravitated to sneakers that maybe they're more comfortable, maybe they want better.

So it's innovation.

Yeah.

Well, and guess what? And guess what? It's not just Hoka and On. If you walk around New York City, every 20-something woman in this city is wearing Sambas, Adidas shoes. They are not wearing. I mean, maybe some of them are wearing the Hokas and the Ons, but you see so many. Yeah, you still see a lot of Air Force Ones. Okay, fine. But increasingly that is, you know, so it's also has to do with fashion, of course. But it also, Nike sort of flooded the zone. A lot of different SKUs that it that it had or rolled out.

Yeah.

Stock up. It's crazy.

Well, I'll just also two, when I went out when when Donahoe was appointed. Of course, he was the longtime on the board of PayPal too. Longtime executive, former eBay CEO. But it was always strange to see a tech-focused executive leading a company that thrives and whose top and bottom lines are driven by product and excitement. It's not driven by the Nike app. Who who gives a damn? Get them the best sneakers to market, upsell customers to higher priced offerings, and improve your margins. That's what, that's always been the story of Nike.

By the way, Elliot Hill had retired from Nike as president of consumer and marketplace.

And that also shows you a succession problem too, that you're dipping back into someone who's been retired the company for for about a year. I think you could realistically, he'll come in here, reset the company, get the foundation right, and maybe under two years, hand off to the next generation of leadership at Nike.

In 2020.

You know, by a complete stroke of luck, whenever we have just enormous retail news, Sozzi is in the newsroom.

It's been a strange, I also remember when Under Armour CEO got pushed out too. Like, I don't know, I'm just like work on zero sleep after you do these spots. I got to get out of here.

You're the guy to go to.

Sozzi, thank you. Perfect timing.

P.