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AIPROPX ReportFortune · 2h ago
Nike brought back a 32-year veteran to save the $60B brand. Two years later, its turnaround is still a ‘long, hard slog
The news traveled quickly across Nike’s sprawling headquarters in Beaverton, Ore. Elliott Hill was coming back.
Employees high-fived. An audible cheer could be heard in parts of Nike’s 400-acre campus. Current and former employees lit up group chats and social media. On Wall Street, investors joined the celebration, sending Nike shares up roughly 8% in after-hours trading following the company’s September 2024 announcement that Hill would come out of retirement to replace John Donahoe as chief executive.
The exuberance reflected more than relief that Donahoe was leaving. Hill’s return carried an almost messianic quality inside a company that had spent several years watching its innovation pipeline sputter, relationships with retailers deteriorate, and its once-untouchable cultural standing erode. Nike was reaching into its own past for someone who seemed uniquely equipped to restore what it had lost.
Hill had spent over 32 years at Nike, rising from an intern in 1988 through sales and leadership positions across North America and Europe before eventually becoming president of consumer and marketplace. By the time he retired in 2020, Nike credited him with helping grow the business to some $39 billion.
The appeal to Nike’s board was obvious. It was buying a turnaround CEO and, just as importantly, buying time. Hill would not have to spend his first year learning the company he had been hired to save. He knew how Nike worked when it was working. He presumably knew where it had gone wrong.
Nearly two years later, the savior narrative has collided with the scale of Nike’s problems.
Hill has repaired relationships with wholesalers, curbed the flood of once-hot sneaker styles Nike let saturate the retail market, and poured resources back into athletic innovation. Wholesale has returned to growth, and performance running is showing signs of renewed strength.
Still, investors remain unconvinced, and the stock market’s initial euphoria has long since disappeared. Nike shares, which jumped when Hill’s appointment was announced, now trade around $40, roughly half their 52-week high and a fraction of their 2021 peak. The decline has reduced Nike to the lowest-priced member of the price-weighted Dow Jones Industrial Average and generated speculation about whether the company could eventually lose its place in the index, an extraordinary symbolic comedown for a brand that once seemed synonymous with American consumer dominance.
“The initial excitement around the appointment has been replaced by a realization that this is a long, hard slog,” says Neil Saunders, managing director at GlobalData Retail. “There are no real quick fixes here.”
The turnaround takes shape
Nike’s latest results show that Hill’s early progress has yet to meaningfully change the company’s overall trajectory. Fourth-quarter revenue fell 1% to $11 billion, but more troubling is how broadly the weakness is distributed. Nike Direct, the business Donahoe had once positioned as the company’s future, fell 7%. Digital sales sank 12%, while revenue at Nike-owned stores declined 7%. Greater China and Europe are also weak.
For Hill, the problem is that improvements in one corner of Nike keep getting swallowed by deterioration somewhere else. A healthier wholesale business cannot offset falling digital sales, struggling stores, and a deeply troubled China business. Running has emerged as one of Nike’s clearest bright spots, delivering five consecutive quarters of double-digit growth and adding roughly $1 billion in revenue over that period. But even gains of that magnitude have not been enough to change the entire trajectory of a company with $46 billion in annual revenue.
And the cost of cleaning up years of mistakes, including discounting old merchandise and reinvesting in the business, continues to weigh on profitability.
If there’s another bright spot, it’s in wholesale. Fourth-quarter wholesale revenue rose 4% to $6.6 billion as Nike rebuilt relationships with retailers it had alienated, including Dick’s Sporting Goods and its Foot Locker business, as well as JD Sports. Getting Nike back onto those shelves matters, but much of that work amounts to recovering business the company surrendered through its own strategic mistakes. It does not yet answer the harder question facing Hill. Where will Nike find significant new growth?
That distinction has become the defining tension of Hill’s tenure. Nike did not bring its celebrated veteran home simply to stabilize a decline. Hill’s first phase has largely consisted of repairs, but Nike must still show that those repairs can translate into growth, consumer excitement, and renewed cultural relevance.
Nike argues that such a judgment is premature. The company says Hill’s immediate priority was to stabilize the business by rebuilding wholesale relationships, clearing excess inventory, and fixing its biggest sneaker franchises. Nike has since moved to the longer-term work of reorganizing around individual sports and developing new products, changes it says could take 24 to 36 months to show up fully in its financial results.
“We have been clear that progress will not be linear and that significant change is required to secure NIKE, Inc.’s long-term leadership,” a Nike spokesperson told Fortune in a statement. “We are not optimizing for short-term outcomes that could compromise the strength of the brand.”
Simeon Siegel, senior managing director at Guggenheim Partners, sees Nike’s uneven results as a reflection of its sheer global scale, with major markets moving on different timetables. “There’s no question the turnaround has been taking longer,” he says.
Still, Siegel sees signs of progress in North America, Nike’s largest geography, where revenue has returned to growth after a prolonged decline. The question is whether North America offers a preview of w...
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