Nike announced on Thursday that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and chief executive officer, as the sportswear giant shakes up its leadership in an effort to revive sales and combat rising competition.

The company's shares rose 8 per cent in after-hours trading following the announcement.

Hill, who spent 32 years at Nike before retiring in 2020, held senior leadership positions across Europe and North America, helping to expand the business to more than $39 billion. He previously served as Nike's president of consumer marketplace, overseeing all commercial and market operations for the Nike and Jordan brands.

Nike stated in a regulatory filing that Hill's compensation as president and chief executive officer will include an annual base salary of $1.5 million. He is set to assume the role on 14 October.

Analysts welcomed the leadership change. Jessica Ramirez of Jane Hali & Associates commented, "It gives a positive signal because it is someone that knows the brand and knows the company very well."

Donahoe, who took the helm in January 2020, was tasked with strengthening Nike's online presence and driving sales through direct-to-consumer channels. This strategy initially proved successful, with the company exceeding $50 billion in annual sales for the first time in fiscal 2023.

However, recent sales have come under pressure, with growth slowing according to estimates compiled by LSEG. Nike's annual sales are projected to decline to $48.84 billion for fiscal 2025 as inflation-weary customers reduce discretionary spending and China's market rebounds more slowly than anticipated.

The company has also faced criticism for a lack of innovative and appealing products, losing ground to rival brands such as On and Hoka, which have attracted shoppers with more fashionable and trendy sneakers.

David Swartz, senior analyst at Morningstar Research, noted, "It clearly looks like Nike wanted to bring back somebody with a lot of experience and deep knowledge of Nike and its issues - unlike John Donahoe, who came in without any experience in the industry."

Swartz added that Hill will need to "work on repairing some of Nike's relationships" with retail partners, as the company's recent strategy of reducing wholesale partnerships has created "some ill will towards Nike" among sneaker and footwear retailers.

The leadership change comes amid heightened expectations following billionaire investor William Ackman's disclosure of a stake in Nike. Ackman's Pershing Square Capital Management has continued to increase its position and now owns 16.3 million shares in the company.

Nike's stock market value increased by $11 billion in extended trading on Thursday following the announcement of the new chief executive officer.

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