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We wanted to remind you that tomorrow investors will focus on Berkshire Hathaway's annual meeting with shareholders. It's quite an affair in the past. This year it will be the first where the highlight is not the man himself, Warren Buffett, having passed the reins now to CEO greg Abel.
Hey, greg Abel in that position, he's facing a problem that seldom confronted his legendary predecessor, and that has to do with a floundering stock price shares, a lag the S and P five hundred index by more than thirty seven percentage points over the past twelve months. Carol, That is the worst stretch for one year going back to the year two thousand.
All right, so a little bit of pressure. Perhaps it makes this year even more interesting. As investors are always consumed by the Berkshire universe. It's public holdings as well, it's it's private ones, it's subsidiary companies. One of those independent subsidiaries under the Berkshire portfolio is Brooks running long time affiliated with Berkshire Hathaway. Toty is from the Lord, the Berkshire shareholder conference in Omaha is Dan Sheridan. He's
the CEO of Brooks Running. Dan, it is so nice to have you back with Tim and me.
We tell you are pretty busy there.
I know that what's going on around you tell us tell us.
Well, Hi Tim, Hi Carol. I'm happy to join you here from Omaha. You can see behind me. We're at the shareholder trade show and we're we're packed here in our booth. We're selling product here to all the shareholders and their family And how fortunate are we to be here this weekend?
What's selling right now, not just at the shareholder meeting, but all around the country and especially in China right now?
Yeah, Tim, we just finished our first quarter. We're up twenty three percent as a company globally, and it's a broad based growth story. All regions for Brooks are growing double digit. You mentioned China up one hundred and thirty six percent. For US, we're really resonating with the Chinese runner. But are our core business here in the US grew twenty percent, our European business grew thirty percent, and it's just an outcome of this strategy that we've been on
for twenty five years. Pinnacle premium performance products with great execution and a brand that continues to strengthen in the market.
So I think we're just getting started. To be honest with you, Well.
Give me some context and perspective, if you would, Dan when it comes to China specifically, you mentioned sales growing one hundred and thirty six percent year over year. How much of top line is actually China right now?
Yeah, China's still a very small percentage of our business. We entered the China market in twenty twenty two, so we're a new entry into the market. But what we're seeing both online and offline is just great resonance with the Chinese runner and the running boom that we've talked about the last few times I've been on continues to gain momentum in the China market, and we're seeing that around the world. As I said, Europe for is just becoming a very strong engine.
And it's not just foot where our Peril.
Business grew thirty four percent globally too, So we're hitting it on all fronts, and it's a global story.
For us from a marketing perspective in China, and then we'll go more global in a second. But while we're on China. I want to get some details from you on marketing there. What is the strategy, the communication strategy with the Chinese consumer because it comes at a time when America is not necessarily viewed I think many people would argue is viewed as an adversary of China right now. So what's the brand positioning and how do you communicate the brand to that consumer?
Yeah, it's really clear for us, Tim, our brand positioning is simply put as we believe everyone's a runner and our jobs are to awaken aliveness in every runner through the transformative power of the run. And what we know based on how we've expanded is that resonates with the Chinese consumer. It's matched with incredible performance products that are merchandised and colored in a way where they can wear it off the run and on the run, and our
brand seems to resonate really well with that consumer. So the mix of marketing is pretty similar by country, and China is a bit more online than some of our other markets, but ultimately our brand is expressed the same way and the consumers receiving it really well.
I have to say, Dan, I actually bought some sneakers this week I'm not going to say what sneakers I bought. I'm just going to be a little far right. But what's interesting is I am not a runner. I do other things, but I've never been a runner. But it's just you go into one of these stores and everybody's buying sneakers. That's what they want to walk around in, That's what they want to live in, that's what they want to wear to work. I see it here. Is
that really the growth? I mean, you guys have such a great running shoe and we know runners love it, but is that continuing to be also a strong dynamic that fuels top and bottom line?
Yeah, I mean trends come and go right and right now. Performance is a trend that we're rooted in. But also the casualization of the workforce and how we show up to work in casual footwork is benefiting Brooks as well. And that's why design matters matched with this performance angle and you can see the beauty in our product as well as the technical benefits.
So we're benefiting from that trend. Carol, for sure.
I'm just going to tell you Elizabeth, one of our producers and managers, she says, I have their nylon plate, nylon plated line. So she is a big user.
Well, we have that hyperion and it.
Does speak to loyalty. Yeah, we talked about this in the past with you, Dan. This this idea that once a runner finds a pair of shoes that they like, they stick with it. That's that's good news and bad news for companies that produce this stuff because they need to make sure they continue to satisfy that person who wants that brander model. But you also want to innovate, and when you innovate, you have to get rid of,
you know, of different lines of shoes. How do you make sure that the person who's loyal to a certain shoe, we'll get that next version of the shoe when you innovate on it.
Yeah, Tim, you're on it. This is the puzzle we have to solve every single year. We have to retain customers that love our products, and we have to innovate for new customers to come into our brand. And we've been able to do that twenty five years of fourteen percent compounded annual growth rate. That comes from understanding the biomechanics of human motion and making sure that when you buy a Brooks that you are in a safe product
and a performance product. We do that every single season, and then you have to match it with innovation and materials, both in the upper and the mid soul. And right now in our space, we've got three styles that are winning around the world. The Glycerin, the Ghost, and the Adrenaline. These are massive styles. They're in the top ten here in the US and the top ten in Europe as well. So it's a franchise style model, but it's retention and attaining new customers that is our mission.
Hey remind us and the audience dan about the supply chain and how that's going. We had we kicked off our hour to talking about the President imposing I think twenty five percent tariffs on EU autos. But stuff continues to come out of Washington that certainly impacts things, the war, the cost of things, customers paying more for gasoline here in the United States and around the globe, any of that kind of a follow through for you guys, and you're filling an impact.
Yeah, I think the last time we spoke, we really felt like we knew where we were heading in terms of tariffs and the impact on our supply chain. Now, obviously we have some other disruption in the Iran war, and you know, we're taking the same approach. We're trying to be very thoughtful in how we manage through price increases to the consumer. We've been very thoughtful in that and you know, we're hopeful that this will resolve in the next couple of months.
If we can get resolution.
You know, we believe the balance of this year will will smooth out for us. But you know, it's another disruption to supply chains, and supply chains hate disruption, as you know.
What if it's not resolved in the next couple of months.
Yeah, So we're working on scenarios right now. Tim, I tell you that the framework we have is, you know, we will have cost increases on raw materials in our products, so we're starting to model that out, and we'll probably have cost increases on moving our product from the manufacturing sites to the ports and to the markets, and and so it's a it's a dynamic time for us. And you know, the worst thing again for supply chains is this disruption and and unpredictability in what we can plan for.
But our team's really good at it and we've been able to weather.
Some of these disruptions over the last few years.
Well, how do you quantify it? Is it? Is it worse than tariffs? Is it worse than COVID disruption? What is it?
Where?
Where does it fall with with what we've seen over the last few years.
I think it's still to be determined, to be honest with you, you know, I think there's just so many unknowns on what the inputs into the raw materials will be at an oil based level, and so I would say that it's not any better than those two.
It's probably on par.
Yeah, on par with those disruptions. Those were huge and are huge, I think for you know, continuing with tariffs.
Any sign of a consumer weakness. It sounds like you guys are doing really well, but any signs as the consumer is hesitating or pulling.
Back, Yeah, not in our category. You know, here's what we know about the run category. Historically, it's pretty resilient, it's durable, and if you think about it in comparison to other sports or categories, this is a pretty affordable sport. You know, for one hundred and fifty dollars, you can buy a pair of running shoes and those will last you for some people up to six months. You compare that to golf or skiing or any outdoor sport. It's
still a very affordable sport. So our consumers during times of economic disruption are pretty durable and stick with it and may trade out some other things, but they'll buy running shoes in apparel.
Hey, one thing we wanted to dig a little deeper into too, is apparel. Your collaboration with Disney powis Fashion Week.
You've got specualization, Carol, That's what I said.
Now, I love it. Just go where you want.
Yeah, Look, you know what we have built this brand on is partnerships, partnerships with some of the best retailers around the world, partnerships and manufacturing, and on the marketing side, we're really leaning into partnerships where we can attach our brand to some of the most epic brands in the world. Disney is super unique, as you know, and we sponsor their race series. I was in Orlando two weeks ago running the five K Springtime Surprise.
It was great.
And we also are matching that pushing into a lifestyle brand, our brand in the lifestyle category. So there's dimensions of your brand as you build your marketing mix, and we think we've got a recipe right now that's going to invite more people into this brand.
Hey, just twenty seconds, real quick, Dan, going to be a little bit of a different meeting this year around.
It really is. You know, I'm excited.
First time in sixty years at Warren's not going to be on the stage, and what a time for Greg to step in. I have so much confidence in his leadership and the leadership of the Berkshire Board.
And we're just thrilled to be here.
And as you can see, there's a lot of people behind me that were thrilled to be here.
All right, well, we were thrilled to have you here, Dan, Good luck this weekend, have fun. Dan Sheridan, CEO Brooks Running joining us from Omaha.