Jonathan Stempel
OMAHA, Neb. (Reuters) – Brooks Running’s new chief executive said the running shoe maker, owned by Warren Buffett’s Berkshire Hathaway (NYSE:), sees China and Europe as growth areas for the business, which generates most of its revenue in the United States.
Dan Sheridan, who became CEO on April 26, said in an interview at Berkshire’s annual shareholder weekend that Brooks plans to open its first store in China this fall in Shanghai, and possibly more later.
“China is one of the top 10 markets by number of participants,” he said on Friday. “This is Brooks’ 30-50 year strategy. We’re in this for the long haul.”
European markets are beginning to pick up after the Russia-Ukraine war and rising energy prices sent consumers retreating while retailers grappled with excess inventories and falling profitability.
Sheridan, 51, said the number of runners worldwide could double by 2031. He believes Brooks, 110, is well positioned to boost sales as 300 million people run or walk as a primary form of fitness.
“When you look at the capabilities of this brand and the trends that underlie those capabilities, it’s easy to be excited about our growth and our future,” he said. Sheridan succeeds Jim Weber, who led Brooks for 23 years and took the brand from the brink of bankruptcy with $1.2 billion in revenue. Weber, 64, retreated primarily due to health reasons.
The new CEO joined Brooks in 1998 and spent his entire career there, becoming chief operating officer in 2019 and president in 2022.
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The Seattle-based company has an industry-leading 21% market share in adult running shoes in the U.S., with its Ghost and Adrenaline GTS models being top sellers, according to Circana/Retail Tracking Service.
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Brooks, which generates 85% of its revenue in the United States, focuses on the high end of the market. “The right way to win a race is a science-based approach coupled with great design,” Sheridan said.
The pandemic’s surge in running popularity has helped support prices, he said. The average retail price of running shoes has risen 11% in just over a year to an average of $87 in the US.
Inflationary pressures and supply chain issues are also easing, he said. Most Brooks shoes are made in Vietnam, with a small portion coming from Indonesia.
These supply chain issues disrupted the company’s annual and semi-annual product launch cycles. “It was costing us almost $150 million in annual revenue. We’re back to a full range of products and a full playbook,” he said.
The latest innovation: nitrogen-based cushioning in the $160 Glycerin 21, which Sheridan says softens impacts but returns energy to the runner.