The athletics retail world is reeling this evening, following the announcements of two major executive changes at top brands.
First came the news early on Tuesday that Under Armour founder Kevin Plank would hand over his CEO title to president and COO Patrik Frisk.
Then, as the day was winding to a close, Nike Inc. surprised the industry with the declaration that its longtime chief, Mark Parker, would also step down as CEO, and that an industry outsider — John Donahoe, current president and CEO of ServiceNow Inc. and chairman of PayPal Holdings — would assume the top executive role.
Both Plank and Parker will retain their positions as executive chairmen.
Matt Powell, VP and senior industry adviser for sports at The NPD Group Inc., noted that the leadership swap at Under Armour has been in the works for some time. “Patrik has taken on more of the day-to-day operations of the company, and now that’s been made official with this change,” he said.
Nike’s executive change, however, comes as more of a surprise. “This one came out of the blue,” said Powell, noting that a sudden decision to shift things around at top could have been precipitated by recent controversies for the brand.
Parker has been taking heat during the past few weeks for his connection to Nike Oregon Project head coach Alberto Salazar — who was handed a four-year ban by the U.S. Anti-Doping Association. In response, the sportswear giant announced that it would “wind down” the program.
And over the past two years, the athletic giant also has been working to overcome criticism both internal and external about its treatment of female employees and athletes, and of minority team members.
“Mark’s been there since 2006, and you see how much growth has happened during his tenure — it’s staggering,” said Isack Fadlon, co-owner of sneaker boutique Sportie LA. “But in the last two to three years, you’ve seen controversy embroil Nike. Any brand of Nike’s size doesn’t want to be anywhere near controversy.”
In its official statement, though, Nike points to Donohoe’s “expertise in digital commerce, technology, global strategy and leadership” as reasons behind his appointment, to support the firm’s digital transformation.
Indeed, in the 2019 fiscal year, the sportswear giant invested over $1 billion evolving its app and NikePlus membership platform, launching new digitally integrated store concepts and deepening its data and analytics facilities.
“[Nike is] pushing more toward digital, so the most revealing information was not necessarily about [Mark Parker] leaving and more about who is taking over,” said James Whitner, owner of streetwear boutiques A Ma Maniere, Social Status and others. “I’m curious to see how [their digital shift] affects the boutique landscape and their focus on the core kid in the street and the partners who help define the marketplace.”
Fadlon agreed: “This new hire — with his background at Ebay and PayPal — indicates where Nike is going in the digital realm, with technology and direct-to-consumer. This move is a natural progression.”
While its athletic rival Adidas has seen more leadership change, Nike has been relatively stable in its top ranks in recent years. Parker has been president and CEO since 2006, and in 2016 he succeeded founder Phil Knight as chairman of the board.
“History shows that Nike hasn’t had many changes in leadership,” said Whitner. “Before Mark, there was one guy who was there for a very short period of time and it was so brief that most don’t even know he existed. Nike as a company hasn’t seen many leaders, so this will be telling.”
That “one guy” was William Perez from S.C. Johnson, who Nike hired in 2004 to lead the athletics firm only to see him exit just over a year later. However, while hiring an outsider might have failed in the past, industry observers think the Swoosh will have better luck this time.
“It’s easier today for an outsider to come in there,” said Rick Mina, president of retail chain WSS. “It’s a different world. And Mark Parker has gotten that company in great shape. They are a product and marketing machine — and they will always have that. But Nike needs to have some outside executives, and a tech guy will bring outside ideas.”
— With reporting from Samantha McDonald, Neil Weilheimer and Peter Verry