A look into the turnaround plan of Nike’s new CEO

On December 19, Elliot Hill, the new chief executive officer of Nike, had his first opportunity to address investors and, with this, release the company’s earnings for the second quarter. Despite an 8 percent drop in revenue for the period, Hill remained upbeat in the meeting, in which he revealed stages of a new turnaround plan as part of ongoing efforts to reposition the business. FashionUnited takes a deeper look into what is to come under Hill's leadership.

In his opening remarks, Hill, who has now been at the helm for two months, said he had an “irrational love for this company”, thus stating that his “singular focus is to help get us back on track”. To achieve such a feat, Hill said he went to meet those associated with the brand–from employees to partners to consumers–across the world to collect insights, with the consistent feedback being “let’s see more of Nike being Nike”.

At the crux of the issue, Hill said that Nike had “lost [its] obsession with sport”, with this to now be moved into the forefront of decision-making. This is to also be reflected in the return to a reliance on athlete insights to accelerate innovation and product creation. His comment continued “with sports as our north star, we will re-energise our culture and identity”.

Hill further pointed to changes in the structure of the business, which he said had shifted investments “away from creating demand for our brand to capture demand through performance marketing for our Nike digital business”, presenting a need to create “stories that inspired”. He also noted that centralisation had impacted resources in key countries and cities, and thus the company must plan to rebalance and resource teams on the group. Digital revenue, meanwhile, is to be fed into the rebuilding of an integrated marketplace, across Nike Direct and wholesale, which will now take on a consumer-led format.

Nike to reposition back towards the premium, sports-centric field

With these missions in mind, Hill drew up near-term actions that the company will now undertake. These include;

• Sharper focus on specific sports: Nike will shift towards “sport-led teams”, segmented by men’s, women’s and kids, in an attempt to identify new opportunities and drive incremental growth by sport and gender.

• A return to franchise management: In response to an increased demand for franchises, including the Kobe lineup, Hill wants Nike to move faster to return to a pull market for classic footwear franchises and develop lines that will fuel growth.

• Creative marketing: In order to illustrate the brand effectively, creative marketing that leverages athletes and sports moments will reflect more intentional investments into moving the brand forward. This will include "aggressive sports marketing” and connecting more closely with certain geographies that already have emotional ties with customers, athletes and influencers.

• Elevating the marketplace: Noting a softening traffic in Nike Direct, physical and digital, due to a lack of newness, Hill said he intends to return to premium destinations leading the sports industry with the goal to elevate customer experiences and representation of the brand.

• Building back partner relations: Hill admitted there was a sense partners of Nike felt the brand had “turned [its] back on them”, and thus announced an intention to regain trust with existing partners, like JD Sports, Foot Locker and Sports Direct, by investing more in their businesses.

In his conclusion, Hill said: “Some of these actions are already underway and some need to move faster. And I will continue to evaluate and assess what is needed. I recognise that some of these actions will have a negative impact on our near-term results. But we’re taking the long-term view here. We’re making the decisions that are best for the health of our brands and businesses. Decisions that will drive shareholder value. I strongly believe Nike’s path to sustainable, profitable growth will be through sport.”