Nike (NYSE: NKE) just announced that its current CEO has retired, and it's bringing in a long-time employee to take the helm. Elliott Hill will become Nike's CEO on Oct. 14. He hopes to be the new face the company needs to turn its fortunes around.
I'll detail Nike's history with lame-duck CEO John Donahoe and whether Hill is truly the spark needed to reignite the ailing consumer discretionary company.
How Donahoe Led Nike Astray
Since Donahoe took over as CEO of Nike in Jan. 2020, the company's performance has been disappointing, to say the least. Shares are down 14% over that time, greatly underperforming their sector. The Consumer Discretionary Select Sector SPDR Fund (ARCA: XLY) has managed to rise by 57%. Revenue has increased slowly over that period, rising a total of just 20% in just under four years.
The first few months of Donahoe's tenure may have tainted his overall strategy for the company. He entered the head role just two months before the beginning of COVID-19 lockdowns in the United States. In the following quarters, Nike's direct-to-consumer revenue stream saw massive growth. Donahoe believed this trend would continue and aimed to shift more of the company's revenue toward this business.
On the surface, it doesn't seem like a bad idea. Direct-to-consumer sales usually have higher margins, and companies cut out the middleman ...
