Nike’s board announced that John Donahoe, the CEO, is retiring. He has been in this role since January 2020. Nike has been struggling with selling products and its stock price has been going down. Elliott Hill, who worked at Nike for over 30 years and retired in 2020, will return as the new CEO next month.
Analysts believe this change in leadership could help Nike focus more on what makes the company special: creating new products and telling great stories through marketing.
Mr. Donahoe helped guide Nike through challenges like the Covid-19 pandemic, growth in online shopping, and problems in the supply chain. However, people thought he wasn’t an innovator or marketer, which are important traits for a company that is famous for combining sports performance with fashion.
Before retiring, Mr. Hill managed Nike’s business and marketing for both Nike and the Jordan Brand. Many analysts think Nike has been focusing too much on selling directly to customers instead of developing new products.
Simeon Siegel, a retail analyst, said Nike’s strength lies in its size and big marketing budget. He said Nike is known for telling stories, and when the focus shifts to selling directly, some of that "magic" gets lost.
Nike’s executive chairman, Mark Parker, said the board carefully chose Mr. Hill as the right person to lead Nike into the future. Nike’s stock price went up 10% after this news.
Nike’s stock has fallen 24% this year and is now around $81 per share, which is much lower than its peak of $177 in November 2021. The company lost a lot of stock value in June when its revenue was expected to drop, surprising many investors.
North America is Nike’s biggest market, making up 40% of its total revenue. But sales in this market fell last year, partly because fewer shoes were sold. Nike also faces competition from newer brands like Hoka and On.
To save money, Nike is cutting costs and has laid off over 700 employees this year, including higher-level leaders. Some analysts worry this might lead to losing important, experienced workers.
Nike co-founder Phil Knight thanked Mr. Donahoe for his time as CEO, and Mr. Donahoe will stay as an adviser until January. In his statement, Mr. Donahoe said Nike needed a new leader, and Elliott Hill is the right choice for the company’s future.
Multiple Choice Questions:
1. Who will be the new CEO of Nike?
a) John Donahoe
b) Elliott Hill
c) Phil Knight
d) Mark Parker
2. What was one of Nike’s struggles during John Donahoe’s time as CEO?
a) Opening new stores
b) Selling shoes and stock price drop
c) Too many new products
d) No marketing campaigns
3. What percentage of Nike’s revenue comes from North America?
a) 20%
b) 30%
c) 40%
d) 50%
4. When will Elliott Hill start his role as CEO?
a) Next week
b) Next month
c) Next year
d) He already started
True/False Questions:
1. John Donahoe became CEO of Nike in 2021. (True/False)
2. Nike’s stock price went up 10% after the leadership change was announced. (True/False)
3. Elliott Hill has worked at Nike for more than 30 years. (True/False)
4. Nike faces competition from new brands like Hoka and On. (True/False)
Vocabulary Activities:
Match the words with their definitions:
1. CEO a) A person who helps give advice.
2. Innovator b) The main leader of a company.
3. Stock c) To introduce new ideas or methods.
4. Revenue d) The money a company earns from selling products.
Fill in the blanks:
1. Nike's __________ is Elliott Hill, who will lead the company next month. (Hint: head of the company)
2. A company's __________ is important because it shows how much money they are making. (Hint: income)
3. Some analysts think Nike focused too much on __________ instead of creating new products. (Hint: selling directly to customers)
4. __________ like Hoka and On are giving Nike some competition. (Hint: Newer brands)
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