John Donahoe 2nd

Nike Inc.’s decision to switch coaches is causing some agita among investors, but analysts saw the c-suite arrival of former eBay chief executive officer John Donahoe 2nd as a sign the company would accelerate its digital transformation.

Shares of Nike slipped 3.4 percent to $92.32 Tuesday following the surprise announcement Monday afternoon that Donahoe would become ceo in January as Mark Parker, ceo since 2006, would become executive chairman. Even with that stock decline, Nike ended the day with a market capitalization of $144 billion — easily making it one of the most-valuable fashion companies in the world.

Parker had some tough sledding in recent years. Nike brand president Trevor Edwards, once seemingly Parker’s heir apparent, left last year amid complaints of a locker room-like culture at the company and the firm’s Oregon Project elite running program was recently shut down amid questions of doping. (A source stressed that Parker has been working with the board for “many months” on a thoughtful transition and that his pending departure is not tied to Oregon Project.)

The stock is still near its all-time high following a steep run up in recent years, when the brand flexed its muscles and kept gaining share, profitably, as retailers struggled. Revenues for the 12 months ended Aug. 31 tallied $39.8 billion, driving profits of $4.3 billion.

Analysts — who stay in close touch with the companies they cover and oftentimes get individual updates on big news — saw in Donahoe an experienced ceo who was familiar with Nike having been on the board since 2014 and well positioned to help the company move faster as it seeks to build its digital business.

Matthew Boss, an analyst at J.P. Morgan, said: “Management sees the opportunity to ‘accelerate rather than overhaul’ Nike’s current strategic plan in particular given J. Donahoe’s engaged/active role in shaping Nike’s current strategy.

“To that end, management cited a firm commitment to the long-term financial model with current five-year plan…calling for high-single-digit revenue growth and mid-teens EPS annual expansion. Further, management is open to new ideas and sees scope to accelerate Nike’s ‘digital transformation’ and ‘consumer direct offense’ initiatives as the organization evolves away from its traditional wholesale-led business model.”

Nike’s direct-to-consumer business is estimated to stand at 31 percent of sales in 2020, up from 19 percent in 2014, according to Boss.

But change at the top, especially at a company as large as Nike, could always complicate things.

Paul Trussell, an analyst at Deutsche Bank, acknowledged that the transition “adds an element of execution risk to an otherwise unblemished story,” but said Nike “remains a must-own stock uniquely positioned to drive an acceleration in the top line globally.”

And Parker will still be on the scene.

“Nike sees the partnership between Donahoe and Mark Parker…as a significant advantage with Parker still focusing on brand, product and innovations [as well as creating a smooth transition] and Donahoe working to accelerate the digital transformation strategy,” Trussell said.

While Donahoe’s ascent caught many by surprise, analysts generally saw it as an orderly process.

Tim Cook, who in addition to being ceo of Apple Inc. is Nike’s lead independent and chair of its management succession committee, said: “In Mark and John, we have two exceptional leaders. With Mark‘s leadership, Nike’s revenue tripled and Nike became one of the most iconic and innovative brands in the world. John has a proven track record as a highly successful three-time ceo and, like Mark, leads with integrity and loves Nike and the world of sport. I know them both well and I could not be more excited they will work together to lead Nike’s next chapter.”

John Kernan, an analyst at Cowen, said, “Now is a fantastic time for Mr. Parker to pass the baton.

“Mr. Donahoe’s skill set and rich experience will directly address Nike’s digital transformation and help the company to become more responsive to digital trends,” Kernan said. “Nike is in the process of amplifying their digital capabilities and speed and Mr. Donahoe will accelerate that trajectory.”

While Nike is on top, Donahoe is also coming in at what is clearly a time of change in sportswear leadership.

Before the Nike news on Tuesday, Under Armour Inc.’s Kevin Plank said that after 23 years he was ceding the ceo role to Patrik Frisk to become executive chairman.

And at Adidas on Monday, Eric Liedtke, executive board member of global brands, said he was stepping down. He has been at Adidas for 25 years and was described as “instrumental in developing” the company’s strategic plan while he also “grew successful open-source collaborations with global influencers such as Kanye West, Pharrell Williams and Beyoncé.” His post is being filled by Brian Grevy, who is returning to Adidas from Gant, where he has been ceo since June 2018.

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