Nike's DTC gamble: purging wholesalers cost Donahoe his job and $24 billion

Nike hired John Donahoe in early 2020 for his tech credentials — eBay CEO, then cloud-company chief — as it chased apps and direct-to-consumer sales. He was only the second outsider CEO in Nike's history, and he had no deep knowledge of sneakers, sneaker culture or store retail. He handled COVID's e-commerce surge deftly, but then set about squeezing wholesale middlemen: Nike stopped selling apparel to retailers like Dillard's and Urban Outfitters and reduced what it shipped to partners like Macy's and Foot Locker.

The shelf space didn't stay empty: rivals from Hoka to On Running to New Balance moved in and took share. Meanwhile Nike's lifestyle versions of its Dunks, Air Force 1s and Air Jordans — mainstream streetwear rather than shoes for athletes — fizzled as consumers got bored, and the innovation pipeline slowed; Donahoe blamed remote work and Zoom. Local running groups, the grassroots engine of the brand, got less attention too.

The reckoning: December 2023 brought Nike's first-ever revenue forecast cut, answered with a consultant-style $2 billion, three-year cost-cutting plan and 2% layoffs that staff read as crisis. June 2024's second cut triggered Nike's biggest-ever stock decline — a $24 billion market-cap drop — and by September the board turned to Elliott Hill, a Nike lifer who had retired in 2020 as president of consumer and marketplace. The stock jumped 7% on the announcement.

The board chose tech credentials over product and retail depth, and got a CEO who underestimated wholesale partners like Foot Locker.

Cutting Dillard's and Urban Outfitters outright and shrinking Macy's orders handed rivals free shelf space.

Nike got hooked on brisk lifestyle-dunk sales and let new-product innovation slow until consumers tired of the same silhouettes.

Cost-cutting was the reflex answer to a revenue problem, deepening the sense of crisis and eroding employee faith.

Sneaker culture can't be run from a spreadsheet: a CEO without product depth who squeezes distributors hands shelf space to rivals

Elliott Hill started as CEO on October 14, 2024, billed as a return to form — insider product and culture knowledge replacing consultant-led cost discipline. Shares rose about 7% on the announcement. Former Nike marketing executive Massimo Giunco's LinkedIn indictment — 'The CEO of Nike doesn't come from the industry. At the end, he is a poorly advised, data-driven guy' — summed up the internal mood.