Nike’s new CEO can’t rely on retro styles, he needs to innovate to transform the company, analyst says

“I’m encouraged to see someone coming back as CEO,” Jim Duffy, a Nike analyst for Stifel Institutional, told Business Insider. “I think where Nike has gone wrong in recent years has been to lose focus on what has made the company great for so many years, which is to innovate and create really interesting products and tell marketing stories that gets the consumer excited about those products.”

Nike made a bold bet in 2020 by tapping Donahoe, a tech CEO, to lead the 56-year-old company into the future. The last time Nike hired an outsider was William Perez, who left the company after only a year due to disagreements with Nike co-founder Phil Knight.

“He didn’t last very long,” Duffy, the Nike analyst, said of Perez.

Donahoe helped transition the company to a digital and direct-to-consumer model at a crucial time when brick-and-mortar stores were closed due to the pandemic, Duffy said.

The outgoing CEO also capitalized on consumer demand for retro styles, including the Air Force One, Nike Dunks and Air Jordan 1s, the shoe worn by legendary NBA player Michael Jordan.

Under his leadership, Donahoe grew the company’s annual sales by more than a third, from $37 billion in 2020 to more than $51 billion in 2023.

But with Donahoe’s change, Nike also reduced its partnership with third-party sellers like Foot Locker and created more shelf space for its rivals like Adidas and New Balance.

“They kind of de-emphasized some of the wholesale distribution and, I think, created oxygen for some competitors to gain shelf space and recognition,” Duffy said.

The Nike analyst also added that the company rested too much on its retro line and didn’t do enough to innovate.

“From a product standpoint, there was kind of an air pocket of innovation,” Duffy said. “The brand, revenue base and bottom line have become overly dependent on a short list of retro styles. As they will, consumer preferences have changed.”

Hill said in a press release that he is excited to return to the company and looks forward to “delivering bold, innovative products that differentiate us in the market and captivate consumers for years to come.”

“I know it hasn’t been easy, and we’ve certainly taken our fair share of shots,” Hill wrote in an email to Nike employees, which was reported by Bloomberg.

Hill will begin his new role on October 14. Donahoe will remain with the company as an adviser until January 2025, the company said.