Nike is looking for a savior to get out of its crisis. The retail and consumer sector in the United States is going through a difficult time, which has generated the need to look for new leaders who bring new strategies. In this sense, many companies have entrusted themselves to “saviors”, major signings at their top that have been celebrated on Wall Street with euphoria or chaos. This happened with the arrival of Chipotle CEO Brian Niccol at Starbucks, which preceded a 20% stock market increase in a single day for the coffee giant. This also happened at Victoria’s Secret, which rose 15% after the incorporation of Hillary Super, who led Rihanna’s lingerie brand.
Today, Nike executives made a similar decision in the midst of a crisis. The sportswear company is down 24% on the brink of a pricing crisis. Faced with this reality, the company fired John Donahoe to hire Elliott Hill, a brand veteran it brought back from retirement and paid him $1.5 million a year. So far, the market has shown great enthusiasm for the announcement, up 7% after learning the news in the hours before the quote. But who is this businessman? And above all, can he save Nike?
Who is Elliott Hill?
The company is bringing in an old acquaintance. Hill has spent his entire career at Nike and, in fact, he said that during his initial processes to join the company He had been “begging for six” months to be admitted as an intern. This finally happened in 1988, after which he proceeded to a promotion throughout the structure. After his first two years, the Texan managed to progress in the sales team and, within a decade, he took over the management of the team sports division.
Since then, he has spent another two decades within the company, alternating between different positions of responsibility and taking charge of the entire structure. He finally managed to occupy the vice-presidency several times before finally becoming president of Geography and Sales in 2013. In 2020, his path seemed completely over when he retired as President of Consumer Affairs and Markets. However, he has now completed his promotion, which had remained incomplete, by accessing the absolute management of the company, which has given him the confidence to get out of a really complicated situation.
When announcing his incorporation, Hill appeared confident and very happy about his return.Nike has always been a fundamental part of who I am. and I am ready to help lead it to an even brighter future. For 32 years, I have had the privilege of working with the best in the industry, helping to make our company the magical place it is today.
Why Nike is in crisis
Nike shares have fallen 20% this year after a sales shock resulting from a deeper crisis. In its latest results, the Oregon company missed expectations, losing 10% of its revenue. In the last quarter showed a 2% decrease in revenue, which the markets did not expect and which completely shook its price. The company assumed that it was facing a strategic crisis and the reason comes precisely from the hiring of its previous CEO Donahoe.
At the gates of covid, when Nike was alive a golden age (on the stock market) with confinementwhich skyrocketed sales of sportswear worldwide, the company hired the historic chairman of Bain & Company and a senior eBay executive. At the time, the signing was celebrated and ignored by other candidates, among whom was precisely Elliott Hill.
The company then embarked on a completely new strategy. Management decided to undertake a huge restructuring of its business model. The company, focused on wholesale, wanted to move towards direct sales to consumers. This ended agreements with hundreds of local business partners while reducing activity with others. This affected Nike’s competitiveness, while other brands gained ground.
“The reorganization resulted in the loss of experience and knowledge gained over two decades of leadership”
And while Adidas, Asics and other brands were expanding into areas that Nike had previously ruled with an iron fist, the company was facing major problems in direct sales. The new DTC model posed management challenges that leads to a surge in stocks and forced the brand to make discounts and lose some profitability. In his Linkedin account, Massimo Giunco explained that this was mixed with an erosion of the image and a “loss of innovation”.
The reason behind this lower creativity is that Nike internally reorganized sections to be more profitableeliminating various categories. For the expert, this made him lose “the experience and knowledge in running, football, basketball, fitness, training… built up over two decades of leadership”. The running sector stands out in particular, where New Balance is experiencing strong growth alongside other competitors.
Can Hill Save Nike?
Faced with this problem, the company decided to call on an old acquaintance of Nike. Someone who can restore your businesses to their former essence and reverse the process that has occurred in the last two years and that has crystallized as a real crisis. This is why the market celebrates this appointment with euphoria. However, even if experts share the idea that it is a step in the right direction, they warn that Nike’s salvation is a long road.
Matt Powell, Spurwink River advisor and principal advisor at BCE Consulting, said the retiring candidate “has all the qualities needed to help the brand turn around. He has extensive experience, both in the U.S. and globally, understands the culture and knows the retailers.” However, “in the short term, I don’t see an immediate impact. I hope they come out and revise the forecast “This is very good news for the stock, both for the executive appointee and the timing,” Yahoo Finance analyst Aneesha Sherman told Yahoo Finance. “Elliott Hill has been at Nike for 32 years. He’s a product guy. He ran retail. He knows the company and the product very well.”
For Powell, the key is in the future. “In the long term, this is exactly the right person to fix Nike. It’s not going to be a miracle solution, it’s going to take them a while to solve this problem.” Concretely, changing the current model and making deals with wholesalers. From Williams Trading, they explain that “Today’s announcement that Nike veteran Elliott Hill This is very positive, it recovers the necessary institutional knowledge and is long overdue. “In his report, the expert explains that it takes between 15 months and 18 months to change the model again and get back on the path to growth.” “The things that have to be done will force them to do less business in the short term,” Powell said. “For example, they have to take the Jordan 1, Air Force 1 and Dunk off the market over a period of time. They have to close these programs to save them. “That means they will do a lot less business.”
