Nike is bringing back the former senior executive Elliott Hill to replace John Donahoe as chief executive as the sportswear brand attempts to revive sales amid rising competition.

Hill, who was at Nike for 32 years, was responsible for helping grow the business to more than $39bn (£29bn) in sales, ultimately leading all commercial and market operations for Nike and its Jordan brand, before retiring in 2020, the company said.

Hill will take over on 14 October and will be paid an annual base salary of $1.5m. He started his career as an assistant athletic trainer with the Dallas Cowboys before joining Nike. The company described him as “an inspiring leader who possesses a strong entrepreneurial drive, deep connection to the consumer and Nike culture”.

Shares in Nike rose 9% in extended trading as investors welcomed the management change.

The Jefferies analyst Randal Konik said Hill’s appointment had been “well received by the market, reflecting confidence in his leadership”. However he added: “Hill faces challenges after his four-year absence, including rising competition and changes in distribution, brand building and product.”

Donahoe, a former eBay and Bain consulting executive who has led Nike since January 2020, was tasked with increasing Nike’s online presence and driving sales through direct-to-consumer channels.

The push initially helped the company build on the demand for casual sportswear after the pandemic, resulting in Nike touching more than $50bn in annual sales in 2023 for the first time.

However, growth has since slowed, and annual sales are expected to fall to $48.87bn in 2025 as inflation-weary customers cut back on discretionary spending, and there is a slower-than-expected rebound in China.

The group announced late last year that it would cut hundreds of jobs, simplify its product ranges and increase its use of automation as part of attempts to save $2bn in costs over the next three years and lift profits.

A lack of innovative and appealing products has also softened demand for Nike as rival brands, including the Roger Federer-backed On and Deckers’ Hoka, attract sneaker fans with their more fashionable and trendy products.

Nike’s big rival Adidas has also experienced a resurgence after a blow from ending its highly successful Yeezy partnership with the rapper Kanye West, who changed his name to Ye in 2021, after he made antisemitic comments on social media. Adidas upped profit forecasts for this year to $1bn in July after sales increased to a better than expected 16% in the three months to June, thanks to the success of vintage styles including the Gazelle and Samba shoe, in particular with women.

Expectations for a change at the top of Nike were heightened after the billionaire investor Bill Ackman disclosed a stake in Nike. Ackman has not commented on his plans for the company.

Donahoe said: “It’s been an honour and privilege to be part of this incredible company, and I’ll always value my time at Nike and the opportunity to lead the organisation. I have great respect for Phil, Mark, Nike and its employees.

“It became clear now was the time to make a leadership change, and Elliott is the right person. I look forward to seeing Nike and Elliott’s future successes.”