Nike veteran Elliott Hill is no stranger to a Monday morning at the $122 billion sportswear giant. The only difference is that this week he’s running the company.
hill already has a lot of problems in his metaphorical inbox: New product launches, a urgent need for innovationweaker sales in certain regions and a share price that has had a bumpy year to say the least.
But Hill can have some confidence.
The news that he would take over as CEO buoyed markets. Analysts viewed the management change as a positive rather than a sign of difficult times ahead.
After all, the 60-year-old manager knows the business inside and out. Hill started as an intern at Nike and worked his way up to president of the consumer and marketplace division over more than 30 years.
In 2020, Hill tried to retire, but after four years that habit hasn’t stuck: he’s back at the company where he spent most of his time Most of his career.
When Nike announced the return of its veteran talent on September 19, the company’s stock price rose $7, from $81 per share to $86.52.
Analysts at Barclays explained the market’s optimism in a note seen by Assets: “We view the announcement positively, particularly given the return of Elliot Hill… and while it will take time to see results, we believe the hiring of a long-time Nike veteran will help drive a company-wide focus on product innovation to revive.” serves its consumers in all marketplaces and in all regions.
“We do not view the announcement as a signal that the coming quarter will be worse than expected and view this management change as largely expected by investors and a positive development given the company’s performance.”
Problem number one: innovation
Nike needs some trendy new products on the shelves, and fast.
For better or worse, competitors like Adidas have released collections with Yeezy – confronted by embattled entertainer “Ye”, aka Kanye West.
Adidas was too buoyed by demand for launches of their Samba and Gazelle linesreported this summer that operating profits for the first half ended June 30 were 682 million euros– almost 190% more than in the same period last year.
Nike does not enjoy a similar fate. For his Results for the first quarter of 2025 As of August 31, Nike reported revenue of $11.6 billion, down 10% on a reported basis.
Barclays notes that Nike’s “once clean inventory” has “suddenly reversed.” The financial institution wrote that this is “due in part to Nike’s aggressive franchise management strategy for its legacy franchises such as AF1, AJ1 and Dunks, which they believe have been overextended in the market.”
Barclays added: “The rapid and significant loss of sales, which have yet to be replaced by new products, is resulting in a significant reduction in fixed costs.”
Problem number two: China
Nike isn’t alone in struggling to attract consumers in China.
The economic conditions are difficult – despite a The government has announced a number of economic stimulus packages-with Luxury brands and discounters alike are struggling To boost sales.
Goldman Sachs In its recent analysis of the brand, the company identified China’s macroeconomic outlook as one of the key issues facing Nike.
In June, equity specialists Brooke Roach, Evan Dorschner, Savannah Sommer and Mentesnot Adamu gave Nike a Buy rating and updated their FY25/26 EPS estimates from $3.85/$4.32 to $3.25/3 .76 USD.
In addition to calling the subdued outlook for China a threat to Nike, Goldman also identified “an intensification of competitive intensity in the sportswear market or lack of success in new product innovations, pressure on wholesale channels, inventory management and advertising, and a slower recovery from temporary margin pressures.”
Problem three: culture
Nike reportedly launched a cost-cutting program earlier this year to cut $2 billion in company expenses.
That meant layoffs — even among the mysterious Nike Archives (DNA) team tasked with preserving artifacts important to the brand’s history.
On one Earnings announcement for DecemberNike CFO Matt Friend outlined cost-cutting measures that would include: “Simplifying our product assortment, improving supply chain efficiency, leveraging our scale to reduce the marginal cost of operations, increasing automation and speed of data and technology, Streamlining our organizational structureReducing management levels and improving our procurement capabilities.”
A few months later Reuters reported that the brand plans to cut 2% of its over 80,000 employees. From June, around 740 rolls will have been eliminated in what management calls the “second phase of impacts.”
Layoffs mean cultural turmoil in any company as employees question whether their jobs are secure.
So Nike employees might be happy to see one of their colleagues return to the roster, especially if Hill makes a point of emphasizing teamwork and relationship building as a key focus of his tenure.
“For 32 years, I have had the privilege of working with the best in the industry and helping make our company the magical place it is today,” Hill said in a statement on the news that he was named CEO.
In the September memo, he added: “I look forward to reconnecting with the many employees and trusted partners with whom I have worked over the years, and equally look forward to building new, impactful relationships, that will move us forward.”