Sweat

Last week, Nike ($NKE) reported a 9% drop in quarterly sales and said it expects a double-digit decline in the next quarter. That explains the dip in share price, despite an earnings beat (54 cents vs. 29 cents estimated). But investors are even more concerned with the bigger picture: after a three-year downward trend, they have reason to question whether the firm can make a comeback. 

A few brokers still believe it can. Among them are Piper Sandler and Oppenheimer, which have ‘outperform’ ratings on the stock. And this mostly stems from faith in the sneaker giant’s new CEO, Elliott Hill. 

Hill replaced John Donahoe in October 2024, and he’s been clear on how he thinks Nike gets back on track: products that are more sport, less lifestyle. Hill is only Nike’s fifth CEO since it was founded in 1972, but it was the second CEO change in five years.

Alongside Donahoe, more than 1,800 CEOs announced departures in the U.S. in 2024. It was the highest total since tracking began in 2002.

That list includes Starbucks' ($SBUX) Laxman Narasimhan, who was replaced in August by new CEO Brian Niccol. The former chief of Chipotle ($CMG) is now entrusted to turn around the coffeemaker's fortunes. Like Elliott Hill, Niccol is embracing the philosophy of bringing a big brand back to its roots. The firm managed an earnings beat last quarter, but a 4% decline in same-store sales and a 6% drop in store traffic suggest that the ‘back to Starbucks’ strategy still has a ways to go.

That shows how brutal things are getting for consumer discretionary stocks in a restrained economy. So a supermarket and pharmacy operator like Kroger ($KR) really didn’t need more woes like the sudden departure of the CEO. Yet that’s what happened this month, with Rodney McMullen leaving after a probe into his ‘personal conduct.’ The surprise announcement sent shares down 2% on the day;  Kroger managed to appease shareholders with updated earnings guidance at the high end of its range.

Tech’s strong 2024 didn’t mean the sector’s executives were in the clear. Intel ($INTC) CEO Pat Gelsinger was ousted in December, after four challenging years in which the chipmaker struggled to keep pace with its semiconductor rivals. During his tenure, Intel lost half of its market value. The recent appointment of Lip-Bu Tan as chief executive seems to have reinstated some investor confidence – at least judging by the stock’s 25% gain over two trading sessions last week.

Maybe no one is as nervous as Boeing ($BA) shareholders, even if they’re no strangers to leadership changes. Boeing reported a US$11.8b loss for 2024, its largest annual loss in four years, driven by a machinist strike and production issues. The company burned cash like a jet engine burns fuel: US$14b in 2024 and US$4b in Q4 alone. Most of this was under the tenure of former CEO Dave Calhoun – the same person who dubbed the door flying off a Boeing 737 Max a ‘quality escape.’ Investors are now bracing for what his replacement Robert ‘Kelly’ Ortberg will bring to the table. 

CEO exits leave a bit of sweat on investors' brows, but it's the strategy that follows that can turn pressure into profit. If you’re one of those waiting to see how a new leadership plays out, keep in mind: opportunity doesn’t wait for the dust to settle.