After four years at the company, Nike CEO, John Donahoe abruptly announced his retirement from the role.
Many analysts and Nike employees celebrated the call and hoped that this shake-up would put the company back on top.
Here’s what led to Donahoe throwing in the towel and what’s coming next for the shoe company…
The Downfall Of John Donahoe, Nike CEO
John Donahoe took the helm as Nike CEO in January 2020…
With Phil Knight, Co-founder of the company, giving him the task of cleaning up the company’s e-commerce operations. Before his time as CEO of Nike, Donahoe worked at consulting firm Bain & Co. and as CEO of eBay.
Donahoe was only the second CEO to not have worked at Nike prior to his appointment…
Despite that, his first two years at the company were massive hits. Donahoe guided the shoe brand through the COVID-19 pandemic and successfully brought back many sneakers that were fan favorites.
His strategy was a raging success… until it wasn’t. Donahoe’s over-reliance on older models made fans think they were overrated, with Bloomberg calling Donahoe…
“THE MAN WHO MADE NIKE UNCOOL”
And this was only the beginning…
As aforementioned, Donahoe was brought on as Nike CEO to revitalize the company’s e-commerce. To do so, Donahoe pulled Nike out of many of its retailers in the hopes that it would lead customers to buy their sneakers on the company’s website and stores.
Retailers like Urban Outfitters, Zappos, and most notably Foot Locker, fresh out of shoes with the swoosh did the next best thing…
THEY STARTED EXHIBITING THE OTHER SNEAKERS THEY HAD… NIKE’S COMPETITION.
Brands like Hoka and On have been giving Nike a run for its money for a while. But now, the company effectively shot itself in the foot with this move.
To make matters worse, because of the company’s focus on e-commerce, sneaker innovation had taken a backseat. This means that when fans were over the reissued sneakers…
The company had no new models or styles to replace them with.
These two factors led to a decline in sales in North America – Nike’s biggest market.
The Rebound(?)
When Donahoe realized that sales were slipping, the Nike CEO announced a company restructuring plan…
One that involved reducing costs by $2 billion and layoffs.
INDISCRIMINATE LAYOFFS ACROSS ALL DEPARTMENTS IN NIKE HQ CREATED ANOTHER ISSUE: A BRAIN DRAIN.
When Nike’s CEO announced layoffs, many sneaker design experts had to leave the company, which meant even more gridlock on the innovation front.
It was clear now to every employee that Donahoe was not an innovator and knew nothing about sneakers.
The rest of Wall Street realized that too when Nike reported its worst day in stocks in company history. When Donahoe announced that quarterly sales would fall 10%, exceedingly over analysts’ expectations…
Nike stock dropped 20% in one day.
UNDER DONAHOE, NIKE STOCK DROPPED 25% THIS YEAR.
So it makes sense that Nike’s board of directors announced Donahoe would be stepping down. Former Nike CEO, Elliott Hill is set to come out of retirement and take over the role.
Hill formerly worked for Nike for 32 years, starting as an intern, before retiring in 2020. Analysts hope that this will usher in a back-to-basics era for the company…
And bring the shoemaker back to its former glory.
Yet most agree that just having Hill back as CEO will not be enough to save the company. Hill is entering as Nike CEO amidst a company morale crisis…
So he’ll have his work cut out for him.
Conclusion
Ultimately, what works in some industries might not translate well to others…
While Donahoe did have the CEO experience to lead as Nike CEO, it seemed he lacked crucial knowledge to actually succeed in the position.
As for the state of the company… Fans will just have to wait and see if Nike can get its cool back.
Be Great,
GCTV Staff
Disclaimer: This content is intended to be used for educational and informational purposes only. Individual results may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment or business decision. Investment, real estate, and business involve great risk and there is no guarantee of performance or results.We are not attorneys, investment advisers, accountants, tax professionals or financial advisers and any of the content presented should not be taken as professional advice. We recommend seeking the advice of a financial professional before you invest, and we accept no liability whatsoever for any loss or damage you may incur.
