Analyst: New Nike CEO will prioritize wholesale partnerships

Nike (NKE) shares are rising after the company announced that CEO John Donahoe will step down next month after five difficult years at the company. Nike veteran Elliott Hill will return from retirement and assume the role of CEO and president starting October 14.

Adrienne Yih, consumer discretionary analyst at Barclays, talks in the Morning Brief about Nike's leadership restructuring and what it means for the company's future.

While Hill faces that challenge, Yih believes he will prioritize relationships with wholesale partners: “They are kind of the foundation of the brand's strength going forward. And even though it dilutes margins, for a brand with $50 billion in global influence, both channels have to work to your advantage.”

She is convinced that Hill is the right man for the job, saying that he is well-liked within the company and that he placed a focus on the global market at Nike before retiring.

“We've moved away from what made Nike so great, which was brand innovation, pipeline, high-interest product and the marketing behind all of that. You have to remember that their demand generation budget used to be 10 percent of sales. Under this leadership, it's gone down to about 7 to 8 percent, partly because there was nothing to hide behind,” she says, adding that she couldn't think of “a better person” for the job.

Yih explains that Hill will headline the “critical” Nike Investor Day on Nov. 19 and believes his remarks will “set the tone to get back to their channel partners in terms of pipeline.” She notes that new products will launch in early 2025, adding that by this time next year, the focus will be on what Nike has in store for the latest back-to-school season.

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This article was written by Melanie Riehl