Elliott Hill is officially assuming the mantle as Nike (NKE) CEO and president on Monday after the ousting of John Donahoe. Nike shares have fallen by 25% year-to-date in 2024. What can Hill bring to the table and turn things around for the sportswear giant?
Barclays Consumer Discretionary Analyst Adrienne Yih speaks with Seana Smith and Brad Smith on the Morning Brief to outline the brand objectives Hill should prioritize.
“The number one thing he does is honestly, it’s to build, rebuild morale. So all the things that are listed as the clinical turnaround things — clean up the inventory, get back into wholesale, innovate — we’ve all been talking about those for probably the past two years under the John Donahoe kind of leadership,” Yih explains. “So we know what those are. But the people who are going to do those three things are the entire organization… Rebuilding those partnerships with their wholesale channel.”
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This post was written by Luke Carberry Mogan.
Mike stock down more than 24% this year as Elliott Hill takes the helm as the new CEO.
Will he be enough to turn around the struggling brand joining us?
Now, we wanna bring in Barclay’s consumer discretionary analyst, Adrian Yee, Adrian, it’s great to have you here.
So we’re just discussing this whether or not Elliott Hill has what it takes in order to really turn around the business, maybe what he needs to focus on in the 1st 100 days.
I’m curious, what is your number one priority or what you are watching for as an analyst?
Oh, let me first say, Brian and I are always on the same page.
So everything he said, I agree with, um the, the number one thing he does is honestly it’s to build rebuild morale.
So all the things that are listed as the, the clinical turnaround things, clean up the inventory, get back into wholesale.
They, we’ve all been talking about those for probably the past two years under the John Donahoe kind of leadership.
So we know what those are.
But the people who are going to do those three things are the entire organization and then the partnerships, right?
Rebuilding those partnerships with their, you know, their wholesale channel.
Um So I really think it’s about the morale and completely changing.
I mean, you have done your calls into the Nike, you know, uh you know, campus as we did.
Um There were those whoops, right that were happening, kind of, you know, virtual whoops that were happening throughout the organization.
And I think that says volumes about kind of the leadership and the type of company that he’s going to rebuild, how much of this rebuilding process also hinges on the roster, athletes here, especially, you know, Sazi brought up a good point even as I think about, I grew up watching Jordan, I also grew up watching Kobe Bryant.
I grew up and I still do watch lebron James.
There are these athletic profiles that are larger than life that brands are able to partner with and certainly increases their value and, and so all of that considered how much of it hinges on the athletic partnership as well as the operational procedure as well that these companies need to bring to life.
That’s a fantastic point.
Um Nike is one of the only organizations that basically um the DNA, right?
When you say Nike, you are like the number one in whatever sport it is that is very, very rare for all these other, even the the up and comers, they’re a running specialty, but there’s not an image of like the number one, the gold medalist, right on that platform.
And that’s really what Nike has to get back to and they get back to that by sponsoring reinvesting in demand, creation, the sponsorship dollars and getting that next generation of everybody that we see on TV, right.
Excelling in whatever sport it is.
So I completely agree with you on that point as well.
Adrian, what’s the timeline look like for reviving this brand?
That is the million dollar question.
What I will say is if we ever have a brand new CEO, um and I’m not a big fan of buying the stock on the day, the CEO is announced because they need to get in there.
And usually they’re coming in in a problem situation that they have to basically kind of repla the business on what I call bedrock margins, right?
So, what I would say is normally it’s at least 6 to 9 months out.
And the true full strategy is that 12 months out.
Um Knowing that uh Elliott Hill is a 31 year veteran of the business and frankly, you know, probably was up for that role or was up for that role, you know, before John Donahoe was put into that role, he’s probably been watching from the sidelines, all the things that are going wrong, he still has all those connections to, to everybody that’s in the organization.
So he can probably cut that, you know, in half.
But at the end of the day, the pure innovation, the R and D is at least Greenfield innovation, right is at least nine months out.
So his work is cut out from what I was saying to, you know, some other clients while you know, when he first was announced, what he can immediately do is make them stop doing the wrong things and he can make a rash of decisions, quick, fast, efficient decisions, high return on his time and the efforts of the company.
And that’s what he can do in the very immediate future.
