1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:07,800 --> 00:00:09,480 Speaker 2: All Right, we want to get a look at the 3 00:00:09,560 --> 00:00:12,720 Speaker 2: consumer and the ever popular world of eth leisure. When 4 00:00:12,720 --> 00:00:15,080 Speaker 2: I'm not wearing this, I'm often in yoga pants and 5 00:00:15,160 --> 00:00:17,040 Speaker 2: also work out clothing. Hey, we want to do this 6 00:00:17,079 --> 00:00:19,640 Speaker 2: with the CEO Brooks. This is the latest data on 7 00:00:19,760 --> 00:00:23,560 Speaker 2: the US labor market. Showed US job openings unexpectedly falling 8 00:00:23,600 --> 00:00:25,439 Speaker 2: in the month of December to the lowest level since 9 00:00:25,480 --> 00:00:29,120 Speaker 2: twenty twenty, layoffs edging up, adding to evidence of sluggish 10 00:00:29,160 --> 00:00:31,920 Speaker 2: demand for workers. And then we also had US companies 11 00:00:31,920 --> 00:00:35,280 Speaker 2: announcing the largest number of job cuts for any January 12 00:00:35,560 --> 00:00:37,800 Speaker 2: since the depths of the Great Recession back in two 13 00:00:37,840 --> 00:00:41,200 Speaker 2: thousand and nine. That's according to the outplacement firm Challenger, 14 00:00:41,240 --> 00:00:42,960 Speaker 2: Gray and Christmas. So a lot to get to with 15 00:00:43,000 --> 00:00:45,360 Speaker 2: our next guest, we do. Welcome back Dan Sheridan. He 16 00:00:45,479 --> 00:00:48,080 Speaker 2: is CEO of Brooks, running the Seattle based subsidiary of 17 00:00:48,080 --> 00:00:50,200 Speaker 2: Warren Buffets Broishire Hathaway. Dan, how are you. 18 00:00:51,120 --> 00:00:53,520 Speaker 3: Hi, Carol, Thanks for having me back. Happy to be here. 19 00:00:53,600 --> 00:00:55,040 Speaker 2: It's great to have you here with Tim and me. 20 00:00:55,640 --> 00:00:57,200 Speaker 2: Lots to get to We're going to get to it. 21 00:00:57,240 --> 00:00:59,440 Speaker 2: I got to say, with the backdrop of markets and 22 00:00:59,480 --> 00:01:03,040 Speaker 2: some nervousness out there and bitcoins continued slide. I got 23 00:01:03,080 --> 00:01:04,600 Speaker 2: to ask you about the macro, and I got to 24 00:01:04,640 --> 00:01:09,440 Speaker 2: ask you, does anyone buy your sneakers with bitcoin or crypto? 25 00:01:10,800 --> 00:01:13,520 Speaker 3: I think if they do, it's a very small percentage, 26 00:01:13,560 --> 00:01:16,360 Speaker 3: you know. I think for us, we just finished our 27 00:01:16,840 --> 00:01:20,280 Speaker 3: twenty twenty five year and we grew sixteen percent. So 28 00:01:20,360 --> 00:01:23,640 Speaker 3: our consumer is very, very healthy right now, and it's 29 00:01:23,720 --> 00:01:27,360 Speaker 3: rooted in the participation, which we've talked about in the past. 30 00:01:27,560 --> 00:01:30,600 Speaker 3: More people around the world are running and walking, and 31 00:01:31,000 --> 00:01:34,480 Speaker 3: Brooks is winning the runner at the cash register, and 32 00:01:34,520 --> 00:01:35,959 Speaker 3: so our consumer's holding up. 33 00:01:36,319 --> 00:01:38,120 Speaker 1: We just talked. We talked with you back in October. 34 00:01:38,120 --> 00:01:40,240 Speaker 1: It was just ahead of the marathon here in New 35 00:01:40,319 --> 00:01:43,039 Speaker 1: York City. Curious how your world has changed since then. 36 00:01:43,280 --> 00:01:45,400 Speaker 1: What can you tell us about changes in consumer demand 37 00:01:45,480 --> 00:01:49,320 Speaker 1: since then, supply chain improvements or supply chain changes, the 38 00:01:49,400 --> 00:01:51,840 Speaker 1: business outlook, what has changed in a few months. 39 00:01:52,760 --> 00:01:55,160 Speaker 3: Yeah, Well, I think you always start with the consumer, 40 00:01:55,280 --> 00:01:59,400 Speaker 3: and our consumer is very resilient. You know. We compete 41 00:01:59,480 --> 00:02:02,840 Speaker 3: in and maybe the most competitive category, and sporting goods 42 00:02:02,880 --> 00:02:05,440 Speaker 3: were the number one brand there. And what we're seeing 43 00:02:05,440 --> 00:02:09,200 Speaker 3: at the consumer level is because running is so important 44 00:02:09,240 --> 00:02:13,040 Speaker 3: in their life. They trade off on other discretionary items, 45 00:02:13,120 --> 00:02:17,240 Speaker 3: but the shoe and apparel always wins because it's so 46 00:02:17,360 --> 00:02:20,560 Speaker 3: important in their life. And we're seeing it around the world. 47 00:02:20,639 --> 00:02:24,400 Speaker 3: Tim The consumer's very very strong in our category. Our 48 00:02:24,400 --> 00:02:28,520 Speaker 3: Ameya business was up over twenty percent. Our Asia business 49 00:02:28,600 --> 00:02:31,880 Speaker 3: growing really really nicely for us, and so it's not 50 00:02:32,080 --> 00:02:36,400 Speaker 3: just the US story here. It truly is a global 51 00:02:36,480 --> 00:02:39,440 Speaker 3: story for us, and we're winning. You know. In terms 52 00:02:39,480 --> 00:02:43,440 Speaker 3: of supply chain, we've seen it somewhat normalized over the 53 00:02:43,520 --> 00:02:45,840 Speaker 3: last call it four or five months. We had a 54 00:02:45,840 --> 00:02:49,200 Speaker 3: lot of tension in the trade discussions and we've got 55 00:02:49,200 --> 00:02:51,560 Speaker 3: our arms around that. But I would tell you it's 56 00:02:51,600 --> 00:02:55,120 Speaker 3: stabilized for us in our category, well. 57 00:02:54,919 --> 00:02:57,600 Speaker 2: You know, and I do wonder so in terms of 58 00:02:58,320 --> 00:03:02,000 Speaker 2: tire of concerns globalsply chains, things have settled down and 59 00:03:02,040 --> 00:03:04,400 Speaker 2: you feel like where they are they will stay that 60 00:03:04,440 --> 00:03:07,120 Speaker 2: way for the next couple of years. 61 00:03:08,240 --> 00:03:11,520 Speaker 3: Yeah, we're hopeful. I mean, based on the signals that 62 00:03:11,560 --> 00:03:16,840 Speaker 3: we track, we think we're in a solid spot right now. Now. 63 00:03:17,120 --> 00:03:20,440 Speaker 3: What we know is that things are changing rapidly in 64 00:03:20,520 --> 00:03:25,600 Speaker 3: terms of the discussion with the administration. But for our category, 65 00:03:25,800 --> 00:03:28,119 Speaker 3: you know, we have high tariffs. I think last time 66 00:03:28,120 --> 00:03:31,359 Speaker 3: we were on we talked about it. Our tariffs are 67 00:03:31,480 --> 00:03:34,720 Speaker 3: extremely high for this category, and so we went to 68 00:03:34,800 --> 00:03:37,960 Speaker 3: work on that through the whole value chain to get 69 00:03:37,960 --> 00:03:40,760 Speaker 3: our arms around it. We're going to see some compression 70 00:03:41,240 --> 00:03:44,720 Speaker 3: in terms of profitability, but in terms of the long 71 00:03:44,800 --> 00:03:47,000 Speaker 3: term vision, we think we've got our arms around it 72 00:03:47,040 --> 00:03:48,920 Speaker 3: and we'll continue to monitor. 73 00:03:49,160 --> 00:03:50,560 Speaker 1: Hey, I want to talk a little bit about China 74 00:03:50,600 --> 00:03:53,840 Speaker 1: because in the fall you told our Bloomberg News team 75 00:03:54,520 --> 00:03:57,240 Speaker 1: that you were going to make a big investment in 76 00:03:57,280 --> 00:03:59,800 Speaker 1: the next few years, thirty stores in China by twenty 77 00:03:59,840 --> 00:04:03,440 Speaker 1: two twenty seven. China sales in twenty twenty five for 78 00:04:03,600 --> 00:04:07,080 Speaker 1: your company up two hundred and forty five percent. At 79 00:04:07,080 --> 00:04:11,960 Speaker 1: the same time, Nike, Adidas, Lululemon, they've been struggling in China. 80 00:04:12,000 --> 00:04:13,120 Speaker 1: What are you doing differently? 81 00:04:14,400 --> 00:04:17,360 Speaker 3: Yeah, Again, it starts with the consumer, and what we 82 00:04:17,440 --> 00:04:20,960 Speaker 3: know about the Chinese consumer is as the middle class 83 00:04:21,080 --> 00:04:23,880 Speaker 3: is growing, this is the perfect time for a brand 84 00:04:23,920 --> 00:04:29,839 Speaker 3: like Brooks to enter. We deliver fantastic performance product consistently 85 00:04:29,920 --> 00:04:33,159 Speaker 3: over time. We have a brand energy that resonates with 86 00:04:33,240 --> 00:04:37,320 Speaker 3: the Chinese runner and we're engaging in the communities that 87 00:04:37,360 --> 00:04:39,960 Speaker 3: are that are you know, part of the run community 88 00:04:40,000 --> 00:04:43,000 Speaker 3: over there, and so the store is central to that 89 00:04:43,320 --> 00:04:46,880 Speaker 3: in China, and so our rollout of stores is a 90 00:04:46,920 --> 00:04:48,520 Speaker 3: big part of this. But we're having a lot of 91 00:04:48,520 --> 00:04:53,520 Speaker 3: success online with those running communities, and we're new entry 92 00:04:53,600 --> 00:04:58,080 Speaker 3: into into China. So the growth we're experiencing is incredible 93 00:04:58,440 --> 00:05:01,680 Speaker 3: and it's just a testament to how we enter markets 94 00:05:01,680 --> 00:05:05,040 Speaker 3: and how we execute. Our team is executing really really 95 00:05:05,080 --> 00:05:05,719 Speaker 3: well over there. 96 00:05:05,880 --> 00:05:08,119 Speaker 2: It does sound really good, and I am curious about 97 00:05:08,120 --> 00:05:10,360 Speaker 2: longer term future plans. You are obviously part of the 98 00:05:10,400 --> 00:05:13,160 Speaker 2: Berkshire universe and have been for a while. Would you 99 00:05:13,200 --> 00:05:15,920 Speaker 2: guys ever consider maybe an acquisition to expand into some 100 00:05:16,000 --> 00:05:18,880 Speaker 2: of the adjacent categories. Talk to us about kind of 101 00:05:18,880 --> 00:05:22,200 Speaker 2: expansion and strategy plans. And we're also always curious, like, 102 00:05:22,200 --> 00:05:25,479 Speaker 2: could you guys go public at some point or do 103 00:05:25,520 --> 00:05:28,080 Speaker 2: you think that you're going to stay within the Berkshire 104 00:05:28,080 --> 00:05:31,040 Speaker 2: homestead for a while more Boy, Carol. 105 00:05:30,839 --> 00:05:34,400 Speaker 3: I hope we stay forever with Berkshire, and I believe 106 00:05:34,440 --> 00:05:38,680 Speaker 3: we will. You know, the biggest advantage we have at 107 00:05:38,680 --> 00:05:41,760 Speaker 3: an ownership structure is Berkshire Hathaway. I talked to you 108 00:05:41,800 --> 00:05:44,960 Speaker 3: about this last time. We're so fortunate to be owned 109 00:05:45,000 --> 00:05:49,560 Speaker 3: by Berkshire. And more importantly, you know, I as a 110 00:05:49,640 --> 00:05:52,839 Speaker 3: CEO have a very long time horizon that I focus 111 00:05:52,920 --> 00:05:57,040 Speaker 3: on because of our ownership, and that's a benefit to 112 00:05:57,120 --> 00:06:01,159 Speaker 3: us in every decision we make, and so ownership matters 113 00:06:01,160 --> 00:06:04,440 Speaker 3: in business. We're lucky and fortunate to have the ownership 114 00:06:04,440 --> 00:06:08,120 Speaker 3: of Berkshire Hathaway, and we continue to take a long 115 00:06:08,200 --> 00:06:12,120 Speaker 3: term approach to this strategy when we enter markets like China, 116 00:06:12,640 --> 00:06:15,160 Speaker 3: like in Europe, and the exposure that we have there 117 00:06:15,240 --> 00:06:18,320 Speaker 3: and the growth that we have there. The fact that 118 00:06:18,360 --> 00:06:21,360 Speaker 3: we can focus on ten and twenty year horizons here 119 00:06:21,720 --> 00:06:24,240 Speaker 3: is very different than our competition. And I don't take 120 00:06:24,279 --> 00:06:25,039 Speaker 3: that for granted. 121 00:06:25,400 --> 00:06:28,760 Speaker 2: That's actually very Chinese if you think about it in 122 00:06:28,839 --> 00:06:29,720 Speaker 2: terms of strategy. 123 00:06:29,880 --> 00:06:32,280 Speaker 1: You know, last time we spoke with you, Warren Buffett 124 00:06:32,279 --> 00:06:34,400 Speaker 1: was still at the helm of Berkshire Hathaway. Now it's 125 00:06:34,440 --> 00:06:37,960 Speaker 1: Greg Abel. How is that going so far? How does 126 00:06:38,000 --> 00:06:42,120 Speaker 1: his leadership compare to Buffets? What's he like? What are 127 00:06:42,120 --> 00:06:45,120 Speaker 1: his priority priorities? What is your contact with him? Ben? 128 00:06:46,360 --> 00:06:48,640 Speaker 3: Yeah, I would tell you the word that comes to 129 00:06:48,680 --> 00:06:52,679 Speaker 3: mind is consistent. It's consistent with the culture of deserve, 130 00:06:52,839 --> 00:06:57,760 Speaker 3: trust and empowerment. Greg has always led with that. It's 131 00:06:57,839 --> 00:07:01,279 Speaker 3: consistent with in terms of how they think of the subsidiaries. 132 00:07:01,360 --> 00:07:05,080 Speaker 3: And so Greg is a very consistent manager and will 133 00:07:05,240 --> 00:07:08,919 Speaker 3: remain that for US. I believe that I had a 134 00:07:09,040 --> 00:07:12,640 Speaker 3: unique opportunity in December to travel to Omaha and spend 135 00:07:12,640 --> 00:07:17,080 Speaker 3: some time with both Greg and Warren and now Adam 136 00:07:17,160 --> 00:07:21,200 Speaker 3: Johnson who's now leading our division. And I could tell 137 00:07:21,240 --> 00:07:24,680 Speaker 3: you that the same things are true throughout the leadership 138 00:07:24,680 --> 00:07:26,960 Speaker 3: at Berkshire. And what an advantage for. 139 00:07:27,000 --> 00:07:29,800 Speaker 2: Brooks Hey one of the things. And we're talking with 140 00:07:29,920 --> 00:07:34,680 Speaker 2: Dan Sheridan, CEO brooks Running joining us from Seattle, Washington. Dan, 141 00:07:34,920 --> 00:07:38,040 Speaker 2: we talked about the Chinese consumer and sounds like things 142 00:07:38,080 --> 00:07:40,480 Speaker 2: are going really well. I would love to know what 143 00:07:40,600 --> 00:07:44,080 Speaker 2: is the breakdown between Europe, China the US and I 144 00:07:44,120 --> 00:07:45,920 Speaker 2: want to just if we can kind of drill down 145 00:07:45,920 --> 00:07:48,280 Speaker 2: a little bit more into how the US consumer is doing. 146 00:07:49,280 --> 00:07:53,480 Speaker 3: Yeah, So for our business, Carol, the US is our 147 00:07:53,560 --> 00:07:58,000 Speaker 3: largest region. About eighty percent of our global revenue comes 148 00:07:58,000 --> 00:08:00,000 Speaker 3: out of the US, and that's why it's so excited 149 00:08:00,480 --> 00:08:03,560 Speaker 3: for US in terms of the growth that we see ahead. 150 00:08:04,400 --> 00:08:07,880 Speaker 3: We are very meaningful in the European market where the 151 00:08:07,960 --> 00:08:11,960 Speaker 3: number one brand in Germany now and Performance Run. It's 152 00:08:11,960 --> 00:08:14,520 Speaker 3: been a you know, a ten year vision of ours 153 00:08:14,240 --> 00:08:17,760 Speaker 3: to achieve that. And we're, as I said, we're just 154 00:08:17,840 --> 00:08:20,120 Speaker 3: getting started in China. So when we look at the 155 00:08:20,120 --> 00:08:24,200 Speaker 3: total addressable market, it's a forty eight billion dollar market 156 00:08:24,320 --> 00:08:28,400 Speaker 3: in terms of run and you know where we invest 157 00:08:28,520 --> 00:08:32,560 Speaker 3: is in the top top countries where where running running 158 00:08:32,640 --> 00:08:36,040 Speaker 3: is exploding. And so the markets that we're set up 159 00:08:36,040 --> 00:08:39,040 Speaker 3: in are the ones that we're investing in. And Western 160 00:08:39,080 --> 00:08:42,400 Speaker 3: Europe's a big investment. China is a big investment. And 161 00:08:42,440 --> 00:08:45,720 Speaker 3: as I said, the consumers super healthy there. It's rooted 162 00:08:45,760 --> 00:08:50,640 Speaker 3: in participation. You know what, we track our participation metrics 163 00:08:50,679 --> 00:08:54,160 Speaker 3: in the US, there's about fifty million runners that run 164 00:08:54,200 --> 00:08:57,160 Speaker 3: twice a week. We think globally that's close to two 165 00:08:57,280 --> 00:09:00,959 Speaker 3: hundred million people that are that are choosing this activity. 166 00:09:01,000 --> 00:09:04,480 Speaker 3: And Brooks is winning with that consumer. So the consumer 167 00:09:04,559 --> 00:09:05,280 Speaker 3: is super healthy. 168 00:09:06,280 --> 00:09:10,960 Speaker 1: So on the consumer and the consumer choosing Brooks, why 169 00:09:10,960 --> 00:09:14,880 Speaker 1: are they choosing Brooks from a technological perspective rather than 170 00:09:15,000 --> 00:09:17,960 Speaker 1: a competitor such as Hoka or Nike. So what is 171 00:09:18,000 --> 00:09:20,920 Speaker 1: the differentiator with Brooks Runnings Technology. 172 00:09:21,880 --> 00:09:24,360 Speaker 3: I love the question Tim, this is why we exist. 173 00:09:24,760 --> 00:09:28,439 Speaker 3: We're a product company first and foremost, and so innovation 174 00:09:29,040 --> 00:09:32,440 Speaker 3: for the Runner is why we win. Every single day. 175 00:09:32,520 --> 00:09:39,040 Speaker 3: We spend hours, months, years researching the biomechanics of human motion. 176 00:09:39,640 --> 00:09:44,640 Speaker 3: We are in the business of keeping people healthy, running farther, faster, longer, 177 00:09:45,440 --> 00:09:47,680 Speaker 3: and we've been able to do that consistently. We're in 178 00:09:47,720 --> 00:09:52,319 Speaker 3: our twenty fifth year of fourteen percent compounded annual growth 179 00:09:52,679 --> 00:09:55,400 Speaker 3: because of the position we have in products, so we 180 00:09:55,480 --> 00:09:59,880 Speaker 3: win first and foremost in product. The second thing is 181 00:10:00,080 --> 00:10:02,839 Speaker 3: we execute really well as a business. As you can 182 00:10:02,920 --> 00:10:06,520 Speaker 3: imagine global supply chains. We sell in over fifty five 183 00:10:06,600 --> 00:10:10,160 Speaker 3: countries around the world. We have developed a supply chain 184 00:10:10,200 --> 00:10:14,160 Speaker 3: and an operation excellence that we think wins in every market, 185 00:10:14,480 --> 00:10:17,320 Speaker 3: and that's not easy to do. That's the really hard part. 186 00:10:17,600 --> 00:10:20,880 Speaker 3: And then this brand speaks to runners. We're an authentic, 187 00:10:21,000 --> 00:10:25,480 Speaker 3: relevant brand that understands the journey of runners around the world. 188 00:10:25,800 --> 00:10:29,120 Speaker 3: So when they're looking for a brand, they find authenticity 189 00:10:29,160 --> 00:10:33,240 Speaker 3: in our brand, and that combination works in every market 190 00:10:33,320 --> 00:10:36,320 Speaker 3: we've gone into. And so we often say we study 191 00:10:36,320 --> 00:10:40,360 Speaker 3: our competition, but we really obsess on the consumer and 192 00:10:40,400 --> 00:10:43,200 Speaker 3: we've been able to stay ahead of the consumer in product, 193 00:10:43,559 --> 00:10:47,960 Speaker 3: in execution and with our brand ethos of let's run there, 194 00:10:48,000 --> 00:10:51,480 Speaker 3: and it's working in every market we're competing in, all right. 195 00:10:51,559 --> 00:10:54,240 Speaker 2: So appreciate getting some time once again with you, Dan, 196 00:10:54,320 --> 00:10:57,200 Speaker 2: Dan Bewell, thank you so much. Dan Sheridan, of course 197 00:10:57,240 --> 00:10:59,640 Speaker 2: he's the CEO, Brooks Running joining us there from Seattle 198 00:10:59,720 --> 00:11:00,440 Speaker 2: Wash and Ted