Nike President and CEO John Donahoe.
Source: Nike
Nike CEO John Donahoe on Friday blamed remote work for the company falling behind on innovation, saying it's hard to be disruptive when people are working from home.
In an interview with CNBC's Sara Eisen from Paris, Donahoe was asked about the lack of fresh new products in the company's lineup, which was a concern among investors.
“What's missing is the kind of bold, disruptive innovation that Nike is known for, and looking back the reasons are fairly simple,” Donahoe said.
He pointed out that shoe factories in Vietnam had to close during the Covid-19 pandemic, but said “more importantly” that Nike employees worked from home for two and a half years.
“In retrospect, it turns out to be very difficult to do bold, disruptive innovation, to develop a bold disruptive shoe on Zoom,” Donahoe said. “Our teams reconvened in person 18 months ago, and we recognize that. That's why we realigned our business, and over the past year we've been relentlessly focused on rebuilding our disruptive innovation pipeline, along with our iterative innovation pipeline.”
Donahoe said Nike's innovation pipeline is “as strong as ever” and consumers can expect new products every season, as well as new stories that the brand has long been known for.
The CEO's statements come at a difficult time for the company. Some analysts and investors have criticized the sneaker giant for lagging behind on innovation and losing market share to startups like On Running and Hoka, which have won over a new generation of runners and grown rapidly in recent years.
In December, Nike announced a broad restructuring plan to cut costs by about $2 billion over the next three years. It also lowered its sales forecasts as it warned of weaker demand in coming quarters.
Two months later, it said it was shedding 2% of its workforce, or more than 1,500 jobs, so it could invest in its growth areas such as running, the women's category and the Jordan brand.
Donahoe emphasized Friday that Nike is still “gaining share” and remains a dominant force in running and all things sports.
“We have done more to advance running over the past 50 years than any brand in the world, and we continue to lead the way with elite runners,” Donahoe said when asked about On and Hoka.
“Innovation has always been what defines Nike in running, as it is in other categories, so we're not just going to copy what other people are doing, we're going to bring innovation.”