China Net Finance, September 27th (Reporter Chen Qiong) - Due to lower than expected performance, sportswear giant Nike has resorted to a big move of "changing coaches". Nike recently announced that its CEO John Donahoe is stepping down and will officially retire on October 13th. Elliott Hill, a senior executive and 60 year old veteran, will take over as the company's president and CEO.
Analysts point out that Nike is trying to boost its performance by restructuring its top management to cope with increasingly fierce competition, but there is still some difficulty in boosting performance in the short term. Xu Xiongjun, founder of Jiude Positioning Consulting Company, told China Net Finance reporters that the main reason for Nike's change of leadership is to cope with the weak global performance. The current CEO comes from a consulting company background, and Nike needs an insider who has a deep understanding of the entire clothing industry and Nike. After Nike released its financial report in June this year, it sparked public questioning from Wall Street analysts about Nike's improper use of personnel. "Are former consultants and technology executives like Tang Ruoxiu compatible with Nike as a traditional consumer brand
According to public information, Elliott Hill is one of Nike's senior executives who has worked at the company for 32 years. He served as the President of Nike Consumer Markets, leading all commercial and marketing operations for Nike and the Jordan brand.
Xu Xiongjun pointed out that Nike has been experiencing weak growth for many years, and this trend is still difficult to change in the short term. It is still quite challenging to truly improve performance, "after all, the global economy is relatively weak and consumption is sluggish. It is still difficult to boost performance in the short term
In early June this year, Nike's sales and first quarter performance expectations fell short of expectations, causing concerns about the company's prospects. The fourth quarter and full year performance reports released by Nike for the fiscal year 2024 show that Nike's full year revenue for 2024 was $51.4 billion, an increase of 1% in currency neutral terms compared to $51.2 billion in the same period last year. In addition, the company has lowered its performance outlook for 2025. Nike predicts that due to the slowdown in growth in the Chinese market and weakened global consumer demand, revenue for the full year of fiscal year 2025 will decrease by mid single digits, and sales in the first quarter will decrease by 10%.
Previously, the channel reform led by Nike CEO Tang Ruoxiu was accused of being the trigger for Nike's sluggish performance. Wall Street analysts pointed out that Nike's shift to DTC (direct to consumer) at the expense of wholesale partners has caused friction, leading to a distance between the company and wholesale partners, resulting in a significant decline in Nike's wholesale business revenue. Nike also admitted during its June earnings conference call that a strategy adopted during the pandemic was too aggressive, emphasizing online sales rather than the traditional combination of physical retail and wholesale partner sales.
The sudden change of leadership will also affect Nike's strategy in the Chinese market. Xu Xiongjun pointed out that Nike's leadership change will definitely have an impact on the Chinese market. "Different leaders have different marketing strategies, and the new leader will bring a series of changes, including changes in marketing strategies and retail models." Citigroup released a research report stating that after Nike's CEO change, it may accelerate the reset of Chinese channel inventory in the fourth quarter, which may be beneficial for Chinese retailer Taobao International, but not beneficial for ANTA and Li Ning.