Nike stock jumped hours after news that CEO John Donahoe was being replaced by company veteran Elliott Hill.

Shares of Nike (NYSE: NKE ) jumped in after-hours trading Thursday after news broke that CEO John Donahoe is leaving the company and will be replaced by Elliott Hill, a Nike veteran who held a number of senior positions before retiring in 2020. .

When Hill returns, he will be Nike’s chief executive officer and president, the company said, and a board director.

Shares of Nike were up more than 8% after hours Thursday afternoon. The stock has generally underperformed this year and is down about 24% year to date.

According to a press release, Donahoe and the board have “decided” that Donahoe will retire from his role as CEO and from the company’s board, although he will continue in a transition advisory role until January 2025. The leadership transition will be fluid. will start working on October 14.

It’s a rocky time

The news follows a challenging year for the sportswear giant, and comes after a difficult time for Donahoe, who succeeded longtime CEO Mark Parker in January 2020.

Parker is now the company’s executive chairman. In a statement, he enthusiastically welcomed Hill back. “Given our future needs, past business performance, and after conducting a well-thought-out succession process, the Board concluded that it was clear that Elliott’s global expertise, leadership style, and deep understanding of our industry and partners, coupled with his passion for sports, our brands, products, consumers, athletes, and employees, makes him the right person to lead Nike into its next phase of growth,” said Parker.

As Fast companyMark Wilson wrote in an in-depth profile of the company earlier this year, “While Parker is a shoe designer by training and known for working directly with design teams, Donahoe served as CEO of eBay and management firm Bain & Company. , where he spent 23 years. In the four years he spent at Nike, he has proven that he is more skilled at calculating than creating.”

When Donahoe started at Nike, he almost found himself fighting the COVID-19 pandemic. He dismantled, reorganized the company’s design and development teams, and developed Nike’s direct-to-consumer channels, while moving away from major retailers.

“The move curtailed Nike’s ‘future order’ program, which allows retailers to order products in advance, giving the company cash even before the products go on sale,” Wilson explained in his story. “The loss of these small retail relationships had a negative effect: Nike alienated valuable feedback from businesses that were close to their customers.”

In the space, running shoes such as Hoka and On began to travel with exclusive customers and retailers. Brooks, on the other hand, surpassed Nike as the leader of the adult performance footwear market in the US in 2022—and held that position in 2023, according to data from Circa.

Nike also faced criticism that it was losing its ability to innovate under Donahoe, who was decidedly more removed from the company’s design teams than Parker. Under Donahoe, the company relied heavily on reissues of old shoes—Air Force 1s, Dunks, and Jordans—for revenue.

Donahoe’s strategy of doubling down on retro reissues and pursuing DTC sales worked in the short term: Nike’s annual revenue grew from $37 billion in 2020 to $51 billion in 2023. But revenue for FY 2024, which ended May 31, only increased. 1%

In June, Nike said it expects Q1 2025 sales to drop 10%. Reports results on October 1.

“Innovation has been an industry-wide challenge during COVID,” Donahoe told Wilson. “We make no apologies for exploiting sneaker culture and the success of the big three franchises.”

The Paris Olympics were a big test for the company—the start of what Donahoe promised would be a multi-year “big cycle” of product releases around Nike Air that would reset the bar for innovation. The song of the company surrounding the Games was “Victory”.is somethingeverything.”

This story is developing…