By Jonathan Stempel
OMAHA, Neb. (Reuters) - The new chief executive of Brooks Running said the running shoe maker owned by Warren Buffett's Berkshire Hathaway (NYSE:) views China and Europe as growth areas for a business that generates most revenue in the U.S.
Dan Sheridan, who became chief executive 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, with possibly more later.
"China is a top-10 market for running participation," he said on Friday. "This is a 30- to 50-year strategy for Brooks. We're in this for the long haul."
European markets are starting to revive after the Russia-Ukraine war and rising energy costs caused consumers to pull back, while retailers struggled with excess inventory and falling margins.
Sheridan, 51, said the number of runners globally could double by 2031. He believes 110-year-old Brooks is well-positioned to capture sales with 300 million people running or walking as their main fitness activity.
"When you look at the opportunities for this brand, and trends that underpin those opportunities, it's easy to be excited in our growth and our future," he said.Sheridan succeeded Jim Weber, who led Brooks for 23 years and took the brand from near bankruptcy to $1.2 billion in revenue. Weber, 64, stepped back primarily for health reasons.
The new CEO joined Brooks in 1998 and has spent his entire career there, becoming chief operating officer in 2019 and president in 2022.
The Seattle-based company commands an industry-leading 21% U.S. market share in adult performance running shoes, according to Circana/Retail Tracking Service, with its Ghost and Adrenaline GTS the top sellers.
NEW PRODUCTS
Brooks, which derives 85% of revenue from the U.S., focuses on the top of the market. "The right way for us to win the runner is through a science-based approach matched with great design," Sheridan said.
Pandemic-fueled growth in running has helped support pricing, he said. The average retail price for performance running shoes rose 11% in a little over a year, to an average $87 in the U.S.
Inflation pressures and supply chain problems are moderating as well, he said. Most Brooks' shoes are made in Vietnam, with a small percentage coming from Indonesia.
Those supply chain snags disrupted the company's annual and semi-annual product launch cycles. "That took almost $150 million out of our revenue annually. We're back to a full assortment of product and a full playbook," he said.
The latest innovation: nitrogen-infused cushioning in the $160 Glycerin 21, which Sheridan says dampens impact but returns energy to the runner.
