Nike's new CEO can't rest on retro styles and must innovate to turn the company around, analyst says

• Nike is naming Elliott Hill, a company veteran of more than 30 years, as its new CEO.
• In the past few years, Nike relied too much on recycling old styles, an analyst told BI.

Nike is bringing in an old face for a new CEO.

The company announced on Thursday that its CEO of four years, John Donahoe, will retire and be replaced by Elliott Hill, a company veteran of more than 30 years. Hill joined the company as an intern in 1988 and left in 2020 as the president of Nike's consumer and marketplace division.

With Hill, analysts are optimistic that the new CEO could use his wealth of institutional knowledge to put Nike back on track to innovating and telling great stories around its products.

"I'm encouraged to see an insider return to the CEO role," Jim Duffy, a Nike analyst for Stifel Institutional, told Business Insider. "I think where Nike went wrong in recent years was losing focus on what has made the company great for so many years, which is innovating and designing really cool products and telling marketing stories that gets the consumer excited about those products."

Nike made a bold bet in 2020 by turning to Donahoe, a tech CEO, to lead the 56-year-old company into the future. The last time Nike hired an outsider was William Perez, who left the company only after a year due to disagreements with Nike cofounder Phil Knight.

"He did not last very long," Duffy, the Nike analyst, said of Perez.

Donahoe helped shift the company toward a digital and direct-to-consumer model at a pivotal time when brick-and-mortar stores were closed due to the pandemic, Duffy said.

The outgoing CEO also capitalized on the consumer demand for retro styles, including Air Force Ones, Nike Dunks, and Air Jordan 1s, the shoe worn by legendary NBA player Michael Jordan.

Under his helm, Donahoe grew the company's annual sales by more than a third, from $37 billion in 2020 to more than $51 billion in 2023.

But with Donahoe's shift, Nike also shrunk its partnership with third-party sellers like Foot Locker and created more shelf-space for its rivals like Adidas and New Balance.

"They kind of de-emphasized some of the wholesale distribution and, I think, created oxygen for some competitors to gain shelf space and recognition," Duffy said.

The Nike analyst also added that the company rested too much of its laurels on the company's retro line and didn't do enough to innovate.

"From a product standpoint, there's been kind of an air pocket of innovation," Duffy said. "The brand, the revenue base, and the profit pool became overly dependent on a short list of retro styles. As they will do, consumer preferences have changed."

Hill said in a press release that he was excited to come back to the company and looked forward to "delivering bold, innovative products, that set us apart in the marketplace and captivate consumers for years to come."

"I know things haven't been easy, and we certainly have taken our fair share of shots," Hill wrote in an email to Nike employees that was reported by Bloomberg.

Hill will begin his new role on October 14. Donahoe will remain at the company as an advisor until January 2025, the company said.