Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: All Right, we want to get a look at the
Speaker 2: consumer and the ever popular world of eth leisure. When
Speaker 2: I'm not wearing this, I'm often in yoga pants and
Speaker 2: also work out clothing. Hey, we want to do this
Speaker 2: with the CEO Brooks. This is the latest data on
Speaker 2: the US labor market. Showed US job openings unexpectedly falling
Speaker 2: in the month of December to the lowest level since
Speaker 2: twenty twenty, layoffs edging up, adding to evidence of sluggish
Speaker 2: demand for workers. And then we also had US companies
Speaker 2: announcing the largest number of job cuts for any January
Speaker 2: since the depths of the Great Recession back in two
Speaker 2: thousand and nine. That's according to the outplacement firm Challenger,
Speaker 2: Gray and Christmas. So a lot to get to with
Speaker 2: our next guest, we do. Welcome back Dan Sheridan. He
Speaker 2: is CEO of Brooks, running the Seattle based subsidiary of
Speaker 2: Warren Buffets Broishire Hathaway. Dan, how are you.
Speaker 3: Hi, Carol, Thanks for having me back. Happy to be here.
Speaker 2: It's great to have you here with Tim and me.
Speaker 2: Lots to get to We're going to get to it.
Speaker 2: I got to say, with the backdrop of markets and
Speaker 2: some nervousness out there and bitcoins continued slide. I got
Speaker 2: to ask you about the macro, and I got to
Speaker 2: ask you, does anyone buy your sneakers with bitcoin or crypto?
Speaker 3: I think if they do, it's a very small percentage,
Speaker 3: you know. I think for us, we just finished our
Speaker 3: twenty twenty five year and we grew sixteen percent. So
Speaker 3: our consumer is very, very healthy right now, and it's
Speaker 3: rooted in the participation, which we've talked about in the past.
Speaker 3: More people around the world are running and walking, and
Speaker 3: Brooks is winning the runner at the cash register, and
Speaker 3: so our consumer's holding up.
Speaker 1: We just talked. We talked with you back in October.
Speaker 1: It was just ahead of the marathon here in New
Speaker 1: York City. Curious how your world has changed since then.
Speaker 1: What can you tell us about changes in consumer demand
Speaker 1: since then, supply chain improvements or supply chain changes, the
Speaker 1: business outlook, what has changed in a few months.
Speaker 3: Yeah, Well, I think you always start with the consumer,
Speaker 3: and our consumer is very resilient. You know. We compete
Speaker 3: in and maybe the most competitive category, and sporting goods
Speaker 3: were the number one brand there. And what we're seeing
Speaker 3: at the consumer level is because running is so important
Speaker 3: in their life. They trade off on other discretionary items,
Speaker 3: but the shoe and apparel always wins because it's so
Speaker 3: important in their life. And we're seeing it around the world.
Speaker 3: Tim The consumer's very very strong in our category. Our
Speaker 3: Ameya business was up over twenty percent. Our Asia business
Speaker 3: growing really really nicely for us, and so it's not
Speaker 3: just the US story here. It truly is a global
Speaker 3: story for us, and we're winning. You know. In terms
Speaker 3: of supply chain, we've seen it somewhat normalized over the
Speaker 3: last call it four or five months. We had a
Speaker 3: lot of tension in the trade discussions and we've got
Speaker 3: our arms around that. But I would tell you it's
Speaker 3: stabilized for us in our category, well.
Speaker 2: You know, and I do wonder so in terms of
Speaker 2: tire of concerns globalsply chains, things have settled down and
Speaker 2: you feel like where they are they will stay that
Speaker 2: way for the next couple of years.
Speaker 3: Yeah, we're hopeful. I mean, based on the signals that
Speaker 3: we track, we think we're in a solid spot right now. Now.
Speaker 3: What we know is that things are changing rapidly in
Speaker 3: terms of the discussion with the administration. But for our category,
Speaker 3: you know, we have high tariffs. I think last time
Speaker 3: we were on we talked about it. Our tariffs are
Speaker 3: extremely high for this category, and so we went to
Speaker 3: work on that through the whole value chain to get
Speaker 3: our arms around it. We're going to see some compression
Speaker 3: in terms of profitability, but in terms of the long
Speaker 3: term vision, we think we've got our arms around it
Speaker 3: and we'll continue to monitor.
Speaker 1: Hey, I want to talk a little bit about China
Speaker 1: because in the fall you told our Bloomberg News team
Speaker 1: that you were going to make a big investment in
Speaker 1: the next few years, thirty stores in China by twenty
Speaker 1: two twenty seven. China sales in twenty twenty five for
Speaker 1: your company up two hundred and forty five percent. At
Speaker 1: the same time, Nike, Adidas, Lululemon, they've been struggling in China.
Speaker 1: What are you doing differently?
Speaker 3: Yeah, Again, it starts with the consumer, and what we
Speaker 3: know about the Chinese consumer is as the middle class
Speaker 3: is growing, this is the perfect time for a brand
Speaker 3: like Brooks to enter. We deliver fantastic performance product consistently
Speaker 3: over time. We have a brand energy that resonates with
Speaker 3: the Chinese runner and we're engaging in the communities that
Speaker 3: are that are you know, part of the run community
Speaker 3: over there, and so the store is central to that
Speaker 3: in China, and so our rollout of stores is a
Speaker 3: big part of this. But we're having a lot of
Speaker 3: success online with those running communities, and we're new entry
Speaker 3: into into China. So the growth we're experiencing is incredible
Speaker 3: and it's just a testament to how we enter markets
Speaker 3: and how we execute. Our team is executing really really
Speaker 3: well over there.
Speaker 2: It does sound really good, and I am curious about
Speaker 2: longer term future plans. You are obviously part of the
Speaker 2: Berkshire universe and have been for a while. Would you
Speaker 2: guys ever consider maybe an acquisition to expand into some
Speaker 2: of the adjacent categories. Talk to us about kind of
Speaker 2: expansion and strategy plans. And we're also always curious, like,
Speaker 2: could you guys go public at some point or do
Speaker 2: you think that you're going to stay within the Berkshire
Speaker 2: homestead for a while more Boy, Carol.
Speaker 3: I hope we stay forever with Berkshire, and I believe
Speaker 3: we will. You know, the biggest advantage we have at
Speaker 3: an ownership structure is Berkshire Hathaway. I talked to you
Speaker 3: about this last time. We're so fortunate to be owned
Speaker 3: by Berkshire. And more importantly, you know, I as a
Speaker 3: CEO have a very long time horizon that I focus
Speaker 3: on because of our ownership, and that's a benefit to
Speaker 3: us in every decision we make, and so ownership matters
Speaker 3: in business. We're lucky and fortunate to have the ownership
Speaker 3: of Berkshire Hathaway, and we continue to take a long
Speaker 3: term approach to this strategy when we enter markets like China,
Speaker 3: like in Europe, and the exposure that we have there
Speaker 3: and the growth that we have there. The fact that
Speaker 3: we can focus on ten and twenty year horizons here
Speaker 3: is very different than our competition. And I don't take
Speaker 3: that for granted.
Speaker 2: That's actually very Chinese if you think about it in
Speaker 2: terms of strategy.
Speaker 1: You know, last time we spoke with you, Warren Buffett
Speaker 1: was still at the helm of Berkshire Hathaway. Now it's
Speaker 1: Greg Abel. How is that going so far? How does
Speaker 1: his leadership compare to Buffets? What's he like? What are
Speaker 1: his priority priorities? What is your contact with him? Ben?
Speaker 3: Yeah, I would tell you the word that comes to
Speaker 3: mind is consistent. It's consistent with the culture of deserve,
Speaker 3: trust and empowerment. Greg has always led with that. It's
Speaker 3: consistent with in terms of how they think of the subsidiaries.
Speaker 3: And so Greg is a very consistent manager and will
Speaker 3: remain that for US. I believe that I had a
Speaker 3: unique opportunity in December to travel to Omaha and spend
Speaker 3: some time with both Greg and Warren and now Adam
Speaker 3: Johnson who's now leading our division. And I could tell
Speaker 3: you that the same things are true throughout the leadership
Speaker 3: at Berkshire. And what an advantage for.
Speaker 2: Brooks Hey one of the things. And we're talking with
Speaker 2: Dan Sheridan, CEO brooks Running joining us from Seattle, Washington. Dan,
Speaker 2: we talked about the Chinese consumer and sounds like things
Speaker 2: are going really well. I would love to know what
Speaker 2: is the breakdown between Europe, China the US and I
Speaker 2: want to just if we can kind of drill down
Speaker 2: a little bit more into how the US consumer is doing.
Speaker 3: Yeah, So for our business, Carol, the US is our
Speaker 3: largest region. About eighty percent of our global revenue comes
Speaker 3: out of the US, and that's why it's so excited
Speaker 3: for US in terms of the growth that we see ahead.
Speaker 3: We are very meaningful in the European market where the
Speaker 3: number one brand in Germany now and Performance Run. It's
Speaker 3: been a you know, a ten year vision of ours
Speaker 3: to achieve that. And we're, as I said, we're just
Speaker 3: getting started in China. So when we look at the
Speaker 3: total addressable market, it's a forty eight billion dollar market
Speaker 3: in terms of run and you know where we invest
Speaker 3: is in the top top countries where where running running
Speaker 3: is exploding. And so the markets that we're set up
Speaker 3: in are the ones that we're investing in. And Western
Speaker 3: Europe's a big investment. China is a big investment. And
Speaker 3: as I said, the consumers super healthy there. It's rooted
Speaker 3: in participation. You know what, we track our participation metrics
Speaker 3: in the US, there's about fifty million runners that run
Speaker 3: twice a week. We think globally that's close to two
Speaker 3: hundred million people that are that are choosing this activity.
Speaker 3: And Brooks is winning with that consumer. So the consumer
Speaker 3: is super healthy.
Speaker 1: So on the consumer and the consumer choosing Brooks, why
Speaker 1: are they choosing Brooks from a technological perspective rather than
Speaker 1: a competitor such as Hoka or Nike. So what is
Speaker 1: the differentiator with Brooks Runnings Technology.
Speaker 3: I love the question Tim, this is why we exist.
Speaker 3: We're a product company first and foremost, and so innovation
Speaker 3: for the Runner is why we win. Every single day.
Speaker 3: We spend hours, months, years researching the biomechanics of human motion.
Speaker 3: We are in the business of keeping people healthy, running farther, faster, longer,
Speaker 3: and we've been able to do that consistently. We're in
Speaker 3: our twenty fifth year of fourteen percent compounded annual growth
Speaker 3: because of the position we have in products, so we
Speaker 3: win first and foremost in product. The second thing is
Speaker 3: we execute really well as a business. As you can
Speaker 3: imagine global supply chains. We sell in over fifty five
Speaker 3: countries around the world. We have developed a supply chain
Speaker 3: and an operation excellence that we think wins in every market,
Speaker 3: and that's not easy to do. That's the really hard part.
Speaker 3: And then this brand speaks to runners. We're an authentic,
Speaker 3: relevant brand that understands the journey of runners around the world.
Speaker 3: So when they're looking for a brand, they find authenticity
Speaker 3: in our brand, and that combination works in every market
Speaker 3: we've gone into. And so we often say we study
Speaker 3: our competition, but we really obsess on the consumer and
Speaker 3: we've been able to stay ahead of the consumer in product,
Speaker 3: in execution and with our brand ethos of let's run there,
Speaker 3: and it's working in every market we're competing in, all right.
Speaker 2: So appreciate getting some time once again with you, Dan,
Speaker 2: Dan Bewell, thank you so much. Dan Sheridan, of course
Speaker 2: he's the CEO, Brooks Running joining us there from Seattle
Speaker 2: Wash and Ted