$Nike (NKE.US)$ Chief Executive Officer John Donahoe will step down on October 13, and will be replaced by former Nike executive Elliott Hill. Following the announcement of the CEO's departure, Nike's stock price surged by over 7%.

In recent years, the sportswear and apparel manufacturing company has been affected by the slowdown in the Chinese market and the challenges from emerging competitors such as Hoka brand of Decks Outdoor Corporation and On Holding.

John Donahoe will resign on October 13, and will serve as a consultant to the company until January 31.

He will be succeeded by former Nike executive Elliott Hill, who will assume the new position starting on October 14.

An analyst stated that Nike's latest financial report released at the end of June was a 'blow' to the stock market. Nike not only failed to meet sales expectations in the fourth quarter, but also lowered its full-year revenue guidance, leading to a series of stock downgrades.

It is worth noting that the entire sportswear industry has slowed down overall from the high growth during the pandemic. However, the recent success of On and Hoka indicates that some of Nike's issues are self-inflicted.

Under the leadership of Donahue, Nike has reduced its wholesale distribution network, opting to focus on direct-to-consumer efforts. In the process, the company has cut ties with many long-time retail partners like Foot Locker, DSW, and Macy's, opening the door for competitors to capture Nike's market share.

Nike's co-founder and former chairman Phil Knight stated in a June statement: 'I have seen Nike's future plans and believe in them wholeheartedly. I am optimistic about Nike's future, and John Donahoe has my unwavering trust and full support.'

However, Thursday's announcement indicates a sharp decline in the board of directors' confidence in Donahoe, who has been the CEO since 2020, prompting even a senior executive to be urged to return to the company.

Hill retired in 2020. Prior to his retirement, he served as the President of Nike's Consumer and Market Division, responsible for all business and marketing operations of Nike and the Jordan brand. Nike stated that during his career at Nike, he held leadership positions in Europe and North America.

Nike's Chairman Mark Parker stated: 'Considering our future needs, past performance, and a thoughtful succession planning process, the board has concluded: Elliott's global expertise, leadership style, profound understanding of our industry and partners, along with his passion for sports, brand, products, consumers, athletes, and employees, make him the right choice to lead Nike into its next growth phase.'

Nike will report its first-quarter earnings ending in August on October 1st.

BMO Capital Markets analyst Simon Siegel stated: 'Hill is widely respected internally and among retail partners, potentially boosting morale immediately. Clearly, success requires exciting products and time, but we expect Hill to drive Nike to regain competitive advantage (focusing on product/market marketing) rather than the status quo of recent years.'

Barclays analyst Adrian Yxh concurs with this.

She wrote in a report on Thursday, "Although it will take time to reflect in performance, we believe that hiring a senior veteran who has worked at Nike for 32 years will help reignite the company's focus on product innovation."

In the short term, this may not be important. Just the change in management is enough to change investors' perception of the company - especially before the investor day scheduled for November 19th.

"This injects new vitality and hope into a blue-chip company that has been partially abandoned."

Editor/Somer