Nike stock jumps after hours on news that CEO John Donahoe is being replaced by company veteran Elliott Hill

Shares of Nike (NYSE: NKE) jumped in after-hours trading on Thursday after news broke that CEO John Donahoe is leaving the company and will be replaced by Elliott Hill, a Nike veteran who had held a number of senior positions before retiring in 2020.

Upon Hill’s return, he will become chief executive and president of Nike, the company said, as well as a director of the board.

Nike shares were up more than 8% after hours as of late Thursday afternoon. The stock has generally underperformed this year and is down around 24% year to date.

According to a press release, Donahoe and the board “have decided” that Donahoe will retire from both his chief executive role and from the company’s board, although he will stay on during the transition. The leadership change will be effective on October 14.

A rocky tenure

The news follows a challenging year for the sportswear giant, and after a rocky tenure for Donahoe, who succeeded longtime CEO Mark Parker in January 2020.

As Fast Company’s Mark Wilson wrote in an in-depth profile of the company earlier this year, “While Parker was a shoe designer by training and known for working directly with the design teams, Donahoe served as CEO of eBay and management consulting firm Bain & Company, where he spent 23 years. In his four years at Nike, he’s proven to be more of a calculator than a creator.”

When Donahoe began, he almost immediately found himself battling the fallout of COVID-19 pandemic. He executed layoffs, restructured the company’s design and development teams, and developed Nike’s direct-to-consumer channels, while moving away from wholesale retailers.

“The move diminished Nike’s ‘futures orders’ program, which allows retailers to preorder products months in advance, giving the company a cash infusion even before products go on sale,” Wilson explained in his story. “The loss of these small-store relationships had an unfortunate side effect: Nike severed a crucial feedback loop from the businesses closest to its customers.”

In the void, running-shoe upstarts like Hoka and On began taking off with customers and specialty retailers. Brooks, meanwhile, overtook Nike as the market leader for adult performance running shoes in the U.S. in 2022—and held that position through 2023, according to data from Circana.

Nike also faced criticism that it was losing its innovation edge under Donahoe, who was decidedly more removed from the company’s design teams than Parker. Under Donahoe, the company leaned heavily on rereleases of older shoes—Air Force 1s, Dunks, and Jordans—to goose revenue.

“Innovation was challenging for the entire industry during COVID,” Donahoe told Wilson. “We don’t apologize for exploiting sneaker culture and the success of three of the largest franchises.”

The Paris Olympics were a big test for the company—the start of what Donahoe promised would be a years-long “super cycle” of product releases around Nike Air that would reset the bar for innovation. The company’s mantra around the Games was “Winning is everything.”

This story is developing…