The CEOs of Nike and Under Armour stepping down at this moment is no coincidence

Stepping down.
Stepping down.
Image: AP Photo/Mary Altaffer
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In a weird accident of timing, both Nike and Under Armour announced imminent succession plans for their longtime CEOs yesterday (Oct. 22). Nike’s Mark Parker became CEO in 2006, capping a decades-long rise at the company that began with designing shoes. Kevin Plank had been CEO of Under Armour since founding the company out of his grandmother’s house in 1996.

That both companies picked the same day to make their announcements was an odd coincidence. Less coincidental is that both companies chose this moment to change their top leadership.

The changes at come at a time of rapid change in retail. The wholesale model of brands relying on retailers for sales is under pressure, while foot traffic to stores is falling and shoppers are doing more of their buying online. Both companies are responding to these shifts, while tackling their own individual issues as they transform their businesses from the inside.

Nike has been investing heavily in technology, including acquiring data-analytics firms while working hard to ramp up its direct-to-consumer sales online. For these reasons it chose a tech executive, former eBay CEO John Donahoe, as Parker’s successor, rather than someone steeped in footwear.

Under Armour has been adjusting to its astounding growth over the past two decades. Since going public in 2005, the company has scaled as fast as it could. But as Plank himself has admitted, Under Armour’s operations didn’t keep pace with the increasing size of the business. His newly announced successor, Patrik Frisk, a 30-year retail veteran credited with reviving boot brand Timberland earlier this decade, joined Under Armour in 2017 to help fix things there. He’s been instrumental in Under Armour’s operational makeover over the past two and a half years. Under Armour is meanwhile also facing a sales slowdown in North America, its biggest market, as it reassesses its wholesale business.

“I think they are facing different challenges and opportunities,” says Matt Powell, a sports industry analyst at research firm NPD Group. “Nike is committed to becoming a vertical retailer, even if it means that some of their wholesale partners are in jeopardy. I believe this change accelerates that shift.”

Parker had previously said he would remain CEO beyond 2020, but both he and Plank plan to step down from their respective roles in January. The timing at Nike raised eyebrows, as it follows allegations last year of gender discrimination at the company and the recent news that Parker knew about the doping of athletes by a Nike-backed running coach. The company has said there is no connection.

In any case, it’s telling that both Donahoe and Frisk weren’t entrenched internal hires with deep backgrounds in creating products. Nike and Under Armour chose people who seem suited to managing the complexities of their global businesses—and with good reason. An analysis by consultancy McKinsey and Business of Fashion last year found that the clothing and footwear industries are becoming more polarized into winners and losers, with a small set of companies making almost all the profits. Operational efficiency was a defining trait among the winners, which included businesses such as luxury group LVMH, Zara-owner Inditex, and Nike.

Under Armour, too, is “in excellent shape operationally, all of which can be attributed to Frisk,” NPD’s Powell adds. Now its dilemma is how to get shoppers to buy more of its performance products at a time when casual activewear rules the market.

It isn’t yet clear how either of these new leaders will approach things. But it’s clear that Nike and Under Armour are both setting themselves up for a future that looks very different from the days when Parker and Plank first became CEOs.