Wall Street criticizes Nike CEO John Donahoe for poor performance.

• At least six investment banks downgraded Nike's stock after the company posted disappointing fiscal 2025 guidance, causing shockwaves on Wall Street.
• Nike's management, including CEO John Donahoe, is facing criticism from analysts at Morgan Stanley and Stifel who question the company's once unwavering credibility.
• Knight expressed his confidence in Donahoe and provided him with his full support, according to CNBC.

CEO John Donahoe appears to be on thin ice.

Nike's former top executive, who has been in charge since January 2020, is losing Wall Street's confidence after the company ended a disappointing fiscal year with more bad news.

Nike announced that its sales in the current quarter are projected to decline by 10%, which is significantly worse than the 3.2% drop forecasted by LSEG, after the company posted its slowest annual sales growth in 14 years, excluding the Covid-19 pandemic.

The company now anticipates a decline in sales for fiscal 2025, contrary to its earlier prediction of growth.

Nike's market value dropped to approximately $92 billion on Friday, following a 20% decline in shares due to the company's quarterly report.

At least six investment banks downgraded Nike's stock after Wall Street received a dismal outlook from the world's largest sportswear company. Analysts at and took it a step further, specifically questioning Nike's management.

"Stifel analyst Jim Duffy wrote that the FY25 guide, which is the 5th downward consensus revision in 6 quarters, has pushed prospects for growth inflection further into 2025, possibly to FY4Q or spring '25 at the earliest. He stated that investors are being asked to underwrite the success of not yet proven styles and look across an uncertain consumer discretionary backdrop into 2HCY24 until momentum could build again into 2HCY25. Duffy added that management credibility is severely challenged and the potential for C-level regime change adds further uncertainty."

Nike's stock has dropped about 25% since Donahoe became its CEO, underperforming both the retail-focused ETFs, which gained around 69% and 67% respectively, during the same time period.

Nike's finance chief Matt Friend on Thursday attributed the guidance cut to a variety of factors, some of which are beyond the company's control, but others are problems it has created under Donahoe's leadership.

As the company scales new styles, pulls back on classic franchises, and works to repair relationships with key retail partners, it anticipates wholesale orders to be slow.

Nike's core sneaker franchises, such as Air Force 1s, Air Jordan 1s, and Dunks, are no longer as popular among loyal customers who shop on the company's website. Critics argue that the sneaker lines have become too dominant in Nike's offerings, causing customers to seek out fresh styles and innovative designs from new competitors.

Nike has lost some of its key customers, runners, due to its focus on direct selling and lack of innovation. Smaller competitors like On Running and Hoka have gained market share.

"Nike's management change is necessary, according to Jessica Ramírez, senior research analyst at Jane Hali & Associates, who told CNBC that consumers have been more active post-pandemic and running is a key sport that they participate in."

"During the post-lockdown period, consumers began to adopt running as a serious activity, resulting in an everyday runner. However, Nike failed to respond to this shift, which indicates a problem with the company's management."

On Thursday, Kevin McCarthy, a senior research analyst with Neuberger Berman, told CNBC's Scott Wapner that the company needs new leadership and suggested that Donahoe's employment contract may soon end.

"McCarthy stated on "Closing Bell" that the issues with the company's execution and management seem to be the root cause of all the problems that have been suggested."

"The company is considering several internal and external candidates for leadership, including former Nike employees, with a change in leadership expected within the next six months."

Donahoe has faced numerous challenges during his tenure due to the Covid-19 pandemic, including shuttered stores, remote workers, and rapidly changing consumer preferences and abilities.

Despite a decline in the company's stock, Nike's annual sales have increased by 37% under his leadership, from $37.4 billion in fiscal 2020 to $51.36 billion in fiscal 2024.

According to Phil Knight, Nike's founder and chairman emeritus, Donahoe is performing well.

"The 86-year-old stated to CNBC that he has seen Nike's plans for the future and wholeheartedly believes in them. He is optimistic about Nike's future and has John Donahoe's unwavering confidence and full support."