Nike shares jumped Friday as investors responded positively to a reshuffling at the sneaker giant’s top leadership post, as investors hope incoming CEO Elliot Hill can reverse the fortunes of the stock under incumbent John Donahoe.
Nike CEO John Donahoe will exit his post next month.
Nike announced Thursday afternoon that Hill, who retired as the company’s head of commercial and marketing operations in 2020, will replace Donahoe, who joined Nike as its CEO in Jan. 2020, beginning Oct. 14.
“This highly anticipated leadership change will inject a much-needed sense of urgency” at Nike, noted Deutsche Bank analyst Krisztina Katai in a note to clients, nodding to Nike stock’s extended struggles under Donahoe as profit growth stalled.
The market agreed with Katai’s assessment, as shares of Nike rose as much as 8.7% to $88 on Friday, hitting their highest intraday price since June 27.
Friday is on track to be Nike stock’s biggest gain since Nov. 10, 2022, though shares remain more than 50% below their 2021 peak.
Hill will be tasked with overseeing Nike’s “effort to rejuvenate innovation, rekindle wholesale relationships, and rebuild sales,” according to Bank of America analyst Lorraine Hutchinson.
-16.5%. That’s how much Nike stock returned to investors from when Donahoe took the helm through Thursday’s close, compared to an 87.3% return for the S&P 500, according to FactSet data, accounting for dividends. It was also a down stretch for competitors like Adidas (-26.6% return over the period) and Lululemon (10.4%).
“The turnaround will take time, but the market will be more forgiving under a new leader,” wrote Bernstein analyst Aneesha Sherman. Wall Street’s impatience was reflected in the company’s most recent financial results, as the stock tanked 20% in June to a 4-year low when Nike disclosed it expected a 10% annual decline in sales for the quarter ending in August.