06:43 AM EDT, 09/20/2024 (MT Newswires) -- Nike ( NKE ) shares rose early Friday as the athletic footwear and apparel maker announced that John Donahoe will retire as chief executive next month, with former longtime company executive Elliott Hill returning to lead the company.

Donahoe, who has been the CEO of Nike ( NKE ) since 2020, will step down from the top role and the company's board of directors, effective Oct. 13, Nike ( NKE ) said late Thursday. Elliott Hill, who retired from the company four years ago, will return to take over the helm, effective Oct. 14. Donahoe will remain as an advisor until Jan. 31, 2025, to ensure a smooth transition.

Nike's ( NKE ) stock spiked 7% in premarket activity.

Hill was the company's president of consumer and marketplace before his retirement, leading all commercial and marketing operations of the Nike ( NKE ) and Jordan brands, according to the sportswear giant. He also served in senior leadership positions across the group's European and North American operations during his previous tenure.

"Given our needs for the future, the past performance of the business, and after conducting a thoughtful succession process, the board concluded it was clear Elliott's global expertise, leadership style, and deep understanding of our industry and partners, paired with his passion for sport, our brands, products, consumers, athletes, and employees, make him the right person to lead Nike's ( NKE ) next stage of growth," Nike ( NKE ) Chairman Mark Parker said in a statement.

In a client note emailed Friday, Truist Securities said it views the leadership change as a "step in the right direction" for Nike ( NKE ). The move can potentially refresh the brand and improve investor sentiment, given Hill's knowledge of the business from his 32-year Nike ( NKE ) tenure, according to the brokerage.

In June, the company reported higher fiscal fourth-quarter earnings year over year, but revenue fell unexpectedly. Nike ( NKE ) is scheduled to release its fiscal first-quarter results in October.

"Nike ( NKE ) has recently faced growing pressure due to sluggish product innovation, marketing issues, and strategic wholesale exits that we believe drove the brand to cede market share," Truist said. "In our view, bringing in Mr. Hill, who has over 3 decades of experience at Nike ( NKE ) and a very positive reputation within the company/industry can meaningfully help reinvigorate the brand's product and marketing."

Truist believes a fundamental recovery in the company remains a long-term process, but the leadership change will give investors more optimism about the trajectory of the business.

Price: 85.66, Change: +4.68, Percent Change: +5.78