Berkshire-Owned Brooks Running Sees Another Record Year

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You're listening to Bloomberg Business Week with Carol Masser and Tim Stenovek on Bloomberg Radio.

All right, we want to get a look at the consumer in the ever popular world of ath leisure. When I'm not wearing this, I'm often in yoga pants and also work out clothing. Hey, we want to do this with the CEO Brooks. This is the latest data on the US labor market. Showed US job openings unexpectedly falling in the month of December to the lowest level since twenty twenty, layoffs edging up, adding to evidence of sluggish

Dan, how are you hi, Carol, Thanks for having me back. Happy to be here, it's great to have you here with Tim and me.

Lots to get to We're going to get to it. I got to say, with the backdrop of marketso and some nervousness out there and bitcoins continued slide. I got to ask you about the macro and I got to ask you, does anyone buy your sneakers with bitcoin or crypto?

I think if they do, it's a very small percentage, you know. I think for us, we just finished our twenty twenty five year and we grew sixteen percent. So our consumer is very, very healthy right now, and it's rooted in the participation, which we've talked about in the past. More people around the world are running and walking, and Brooks is winning the runner at the cash register, and so our consumer is holding up.

We just talked. We talked with you back in October. It was just ahead of the marathon here in New York City. Curious how your world has changed since then. What can you tell us about changes in consumer demand since then, supply chain improvements or supply chain changes, the business outlook, what has changed in a few months.

Yeah, Well, I think you always start with the consumer, and our consumer is very resilient. You know, we compete in maybe the most competitive category, and sporting goods were the number one brand there. And what we're seeing at the consumer level is because running is so important in their life, they trade off on other discretionary items, but the shoe and apparel always wins because it's so important in their life, and we're seeing it around the world.

You know.

In terms of supply chain, we've seen it somewhat normalize over.

The last call it four or five months.

We had a lot of tension in the trade discussions and we've got our arms around that. But I would tell you it's stabilized for us in our cab category.

Well, you know, and I do wonder so in terms of tire of concerns global supply chains, things have settled down and you feel like where they are they will stay that way for the next couple of years.

Yeah, we're hopeful.

I mean, based on the signals that we track, we think we're in a solid spot right now.

Now.

What we know is that things are changing rapidly in terms of the discussion with the administration. But for our category, we you know, we have high tariffs. I think last time we were on we talked about it. Our tariffs are extremely high for this category and so we went to work on that through the whole value chain to

And I want to talk a little bit about China because in the fall you told our Bloomberg New team that you were going to make a big investment in the next few years, thirty stores in China by twenty twenty seven. China sales in twenty twenty five for your company up two hundred and forty five percent. At the same time, Nike, Adidas, Lululemon, they've been struggling in China. What are you doing differently?

Yeah, Again, it starts.

With the consumer, and what we know about the Chinese consumer is as the middle class is growing, this is the perfect time for a brand like Brooks to enter we deliver fantastic performance product consistently over time. We have a brand energy that resonates with the Chinese Runner and we're engaging in the communities are that are part of the run community over there, and so the store is central to that in China, and so.

Our rollout of stores is a big part of this.

But we're having a lot of success online with those running communities and we're new ent thanks into China.

So the growth we're experiencing.

Is incredible and it's just a testament to how we enter markets and how we execute.

Our team is executing really really well over there.

It does sound really good, and I am curious about longer term future plans. You are obviously part of the Berkshire universe and have been for a while. Would you guys ever consider maybe an acquisition to expand into some of the adjacent categories. Talk to us about kind of expansion and strategy plans. And we're also always curious like, could you guys go public at some point or do you think that you're going to stay within the Berkshire homestead for a while more?

Boy, Carol, I hope we stay forever with Berkshire, and I believe we will. You know, the biggest advantage we have at an ownership structure is Berkshire Hathaway. I talked to you about this last time. We're so fortunate to be owned by Berkshire. And more importantly, you know, I as a CEO have a very long time horizon that I focus on because of our ownership, and that's a benefit to us in every decision we make, and so

And I don't take that for granted.

That's actually very Chinese if you think about it in terms of strategy.

You know, last time we spoke with you, Warren Buffett was still at the helm of Berkshire Hathaway. Now it's greg Abel. How is that going so far? How does his leadership compare to Buffets? What's he like? What are his priority priorities. What is your contact with him, Ben, Yeah.

I would tell you the word that comes to mind is consistent. It's consistent with the culture of deserve, trust and empowerment. Greg has always led with that. It's consistent with in terms of how they think of the subsidiaries. And so Greg is a very consistent manager and will remain that for US. I believe that I had a unique opportunity in December to travel to Omaha and spend some time with both Greg and Warren and now Adam Johnson who's now leading our division.

And I could tell you that the same things are true throughout the leadership at Berkshire. And what an advantage for brooks Hey one of the things.

And we're talking with Dan Sheridan, CEO brooks Running joining us from Seattle, Washington. Dan, we talked about the Chinese consumer and sounds like things are going really well. I would love to know what is the breakdown between Europe, China the US and I want to just if we can kind of drill down a little bit more into how the US consumer is doing.

Yeah, So for our business, Carol, the US is are our largest region, about eighty percent of our global revenue comes out of the US, and that's why it's so exciting for us in terms of the growth that we see ahead. We are very meaningful in the European market where the number one brand in Germany now and performance run.

It's been a you know.

A ten year vision of ours to achieve that. And we're, as I said, we're just getting started in China. So when we look at the total addressable market, it's a forty eight billion dollar.

Market in terms of run. And you know where we.

Invest is in the top top countries where where running running is exploding. And so the markets that we're set up in are the ones that we're investing in. And Western Europe's a big investment. China is a big investment. And as I said, the consumers super healthy there. It's rooted in participation. You know what, we track our participation metrics in the US, there's about fifty million runner that

So the consumer is super healthy.

So on the consumer and the consumer choosing Brooks, why are they choosing Brooks from a technological perspective rather than a competitor such as Hoka or Nike. So what is the differentiator with Brooks Runnings technology.

I love the question, Tim. This is why we exist.

We're a product company first and foremost, and so innovation for the Runner is why we win. Every single day, we spend hours, months, years researching the biomechanics of human motion. We are in the business of keeping people healthy, running farther, faster, longer, and we've been able to do that consistently. We're in our twenty fifth year of fourteen percent compounded annual growth because of the position we have in products, so we win first and foremost in product.

The second thing is we execute really well as a business.

As you can imagine global supply chains. We sell in over fifty five countries around the world. We have developed a supply chain and an operation excellence that we think wins in every market, and that's not easy to do.

That's the really hard part. And then this brand speaks to runners.

We're an authentic, relevant brand that understands the journey of runners around the world. So when they're looking for a brand, they find authenticity in our brand, and that combination works in every market we've gone into, and so we often say we study our competition, but we really obsess on the consumer.

And we've been able to stay ahead of

The consumer in product, in execution, and with our brand ethos of let's run there, and it's working in every market we're competing in