Nike’s new CEO starts today: Here’s what experts say Elliott Hill should focus on

Hill There are already a bunch of problems in his metaphorical tray: new product launch, one urgent need for innovationSales are down in certain regions and the stock price has had a bumpy year to say the least.

But Hill may have some confidence.

Markets were buoyed by the news that he would take over as CEO, while analysts viewed the leadership change as favorable rather than a sign of tough times ahead.

After all, the 60-year-old CEO knows the business inside and out. Hill started at Nike as an intern and worked her way up over 30 years to become president of consumer and market decisions.

In 2020, Hill decided to retire, but after four years, the routine remained unchanged: he returned to the business where he had spent most of his time working. most of his career.

When Nike announced the return of veteran talent on September 19, the company’s stock price jumped $7 from $81 per share to $86.52.

Analysts at Barclays explains the market optimism, wrote in a note seen by Luck: “We view this announcement positively, especially with the return of Elliot Hill… and while it will take time to realize results, we believe the hiring of a long-time veteran Nike will help ignite a company-wide focus on product innovation, serving its consumers across markets and geographies.

“We do not view this announcement as a signal that the upcoming quarter will be worse than expected and view this management change as expected by investors and as a positive development based on the company’s performance. performance of the company.”

Issue number one: Innovation

Nike needs some hot new products on the shelves, and they need them fast.

For better or worse, competitors such as Adidas has released collections with Yeezy—going head-to-head with popular entertainer ‘Ye’, also known as Kanye West.

Adidas also did excited by the demand for their Samba and Gazelle linesreported this summer that operating profit for the first half of the year ended June 30 was €682 million—an increase of nearly 190% over the same period last year.

Nike has not enjoyed similar fortunes. For it First quarter 2025 results ending August 31, Nike reported revenue of $11.6 billion, down 10% from the report.

Barclays noted that Nike’s “once-clean inventory” had been “suddenly reversed.” The financial institution writes that this is “in part due to Nike’s aggressive franchise management strategy for its legacy franchises, such as AF1, AJ1 and Dunks, which it believes has been overextended into the market.”

Barclays added: “The rapid and significant loss of sales, which have not yet been replaced by new products, will create a significant reduction in fixed cost leverage.”

Problem two: China

Nike is not alone in its struggle to attract consumers in China.

Economic conditions are difficult—though series of financial stimulus announced by the government-with Luxury brands and discount retailers are both struggling to promote sales.

Goldman Sachs identified China’s macroeconomic outlook as one of the key issues facing Nike in its most recent analysis of the brand.

In June, equities experts Brooke Roach, Evan Dorschner, Savannah Sommer and Mentesnot Adamu gave Nike a ‘buy’ rating and updated its FY25/2026 EPS estimate down from 3 $.85/$4.32 to $3.25/$3.76.

In addition to citing China’s gloomy outlook as a threat to Nike, Goldman also identified “an increase in the competitive intensity of the sportswear market or a lack of success in new product innovation, pressure on wholesale channels, inventory management and promotions, recovery of margin pressure is temporarily slower.” ”

Third issue: Culture

Earlier this year, Nike reportedly began a cost-cutting plan to cut $2 billion in spending from the business.

This means layoffs—even within the business’s mysterious Nike Archives (DNA) team tasked with preserving artifacts important to the brand’s history.

On one December earnings callNike CFO Matt Friend outlined cost-cutting measures including “simplifying product assortment, improving supply chain efficiency, leveraging our scale to reduce costs marginal operating costs, increased automation and speed from data and technology, Streamline our organizational structurereducing management layers and enhancing our procurement capabilities.”

A few months later, Reuters reports the brand is planning to cut 2% of its more than 80,000 employees. Via June, about 740 roles will be phased out in what management calls the “second impact phase.”

Layoffs mean cultural chaos at any business, leaving employees wondering whether their roles are secure.

So Nike employees may be happy to see one of their own return to work, especially as Hill emphasized teamwork and relationship building as one of the key focus areas. during his term.

Hill said in a statement accompanying the news that he would take over as CEO: “For 32 years, I have had the privilege of working with the best people in the industry, helping shape our company into a magical place like today.”

In the September memo, he added: “I look forward to reconnecting with the many trusted employees and partners I have worked with over the years and am also excited to build new relationships. This new, impactful relationship will move us forward.”