Berkshire-Owned Brooks Running Sees Another Record Year

0:00They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit LifeMD.com slash goodlife. The thing about AI for business, it may not automatically fit the way your business works.

0:35Dan Sheridan:At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions.

1:26The Cincinnati Insurance Companies. Let them make your bad day better. Find an agent at c-i-n-f-i-n dot com. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevec on Bloomberg Radio. All right. We want to get a look at the consumer in the ever-popular world of athleisure. When I'm not wearing this, I'm often in yoga pants. And also workout clothing. Hey, we want to do this with the CEO of Brooks. This has the latest data on the U.S. labor market showed U.S. job openings unexpectedly falling in the month of December to the lowest level since 2020, layoffs edging up, adding to evidence of sluggish demand for workers.

2:12And then we also had U.S. companies announcing the largest number of job cuts for any January since the depths of the Great Recession back in 2009. That's according to the outplacement firm Challenger Gray in Christmas. So a lot to get to with our next guest. We do welcome back Dan Sheridan. He is CEO of Brooks Running, the Seattle-based subsidiary of Warren Buffett's Berkshire Hathaway. Dan, how are you? Hi, Carol. Thanks for having me back. Happy to be here. It's great to have you here with Tim and me. Lots to get to. We're going to get to it. I got to say, with the backdrop of markets, though, and some nervousness out there, and Bitcoin's continued slide, I got to ask you about the macro.

2:46And I got to ask you, does anyone buy your sneakers with Bitcoin or crypto? I think if they do, it's a very small percentage. You know, I think for us, we just finished our 2025 year and we grew 16 percent. So our consumer is very, very healthy right now. And it's rooted in the participation, which we've talked about in the past. More people around the world are running and walking and Brooks is winning the runner at the cash register. And so our consumer is holding up. We just we talked with you back in October. but it was just ahead of the marathon here in New York City. Curious how your world has changed since then.

3:25What can you tell us about changes in consumer demand since then? Supply chain improvements or supply chain changes? The business outlook? What has changed in a few months? Yeah, well, I think you always start with the consumer. And our consumer is very resilient. You know, we compete in maybe the most competitive category in sporting goods. We're the number one brand there. And what we're seeing at the consumer level is because running is so important in their life, they trade off on other discretionary items. But the shoe and apparel always wins because it's so important in their life. And we're seeing it around the world, Tim.

4:03The consumer is very, very strong in our category. Our EMEA business was up over 20 percent. Our Asia business growing really, really nicely for us. And so it's not just a U.S. story here. It truly is a global story for us and we're winning. You know, in terms of supply chain, we've seen it somewhat normalized over the last, call it four or five months. We had a lot of tension in the trade discussions and we've got our arms around that. But I would tell you it's stabilized for us in our category. Well, you know, and I do wonder, so in terms of tariff concerns, global supply chains, things have settled down and you feel like where they are, they will stay that way for the next couple of years?

4:49Yeah, we're hopeful. I mean, based on the signals that we track, we think we're in a solid spot right now. Now, what we know is that things are changing rapidly in terms of the discussion with the administration. But for our category, we have high tariffs. I I think last time we were on, we talked about it. Our tariffs are extremely high for this category. And so we went to work on that through the whole value chain to get our arms around it. We're going to see some compression in terms of profitability. But in terms of the long term vision, we think we've got our arms around it and we'll continue to monitor.

5:30Hey, I want to talk a little bit about China because in the fall, you told our Bloomberg News team that you were going to make a big investment in the next few years. 30 stores in China by 2027. China sales in 2025 for your company up 245%. At the same time, Nike, Adidas, Lululemon, they've been struggling in China. What are you doing differently? Yeah, again, it starts with the consumer. And what we know about the Chinese consumer is as the middle class is growing, this is the perfect time for a brand like Brooks to enter. We deliver fantastic performance product consistently over time. We have a brand energy that resonates with the Chinese runner.

6:16And we're engaging in the communities that are that are part of the run community over there. And so the store is central to that in China. And so our rollout of stores is a big part of this. But we're having a lot of success online with those running communities. And we're new entry into China. So the growth we're experiencing is incredible. And it's just a testament to how we enter markets and how we execute. Our team is executing really, really well over there. It does sound really good. And I am curious about longer term future plans. You are obviously part of the Berkshire universe and have been for a while.

6:54Would you guys ever consider maybe an acquisition to expand into some of the adjacent categories? Talk to us about kind of expansion and strategy plans. And we're also always curious, like, could you guys go public at some point? Or do you think that you're going to stay within the Berkshire homestead for a while? More? Boy, Carol, I hope we stay forever with Berkshire, and I believe we will. You know, the biggest advantage we have at an ownership structure is Berkshire Hathaway. I talked to you about this last time. We're so fortunate to be owned by Berkshire. And more importantly, you know, I as a CEO have a very long time horizon that I focus on because of our ownership.

7:36And that's a benefit to us in every decision we make. And so ownership matters in business. We're lucky and fortunate to have the ownership of Berkshire Hathaway. And we continue to take a long term approach to this strategy. When we enter markets like China, like in Europe and the exposure that we have there and the growth that we have there, the fact that we can focus on 10 and 20 year horizons here is very different than our competition. And I don't take that for granted. That's actually very Chinese, if you think about it, in terms of strategy. You know, last time we spoke with you, Warren Buffett was still at the helm of Berkshire Hathaway.

8:16Now it's Greg Abel. How is that going so far? How does his leadership compare to Buffett's? What's he like? What are his priorities? What has your contact with him been? Yeah, I would tell you the word that comes to mind is consistent. It's consistent with a culture of deserved trust and empowerment. Greg has always led with that. It's consistent in terms of how they think of the subsidiaries. And so Greg is a very consistent manager and will remain that for us. I believe that. I had a unique opportunity in December to travel to Omaha and spend some time with both Greg and Warren and now Adam Johnson, who's now leading our division.

9:02And I could tell you that the same things are true throughout the leadership at Berkshire. And what an advantage for Brooks. Hey, one of the things and we're talking with Dan Sheridan, CEO of Brooks Running, joining us from Seattle, Washington. Dan, we talked about the Chinese consumer and sounds like things are going really well. I would love to know what is the breakdown between Europe, China, the U.S.? And I want to just if we can kind of drill down a little bit more into how the U.S. consumer is doing. Yeah. So for our business, Carol, the U.S. is our largest region. About 80 percent of our global revenue comes out of the U.S.

9:40And that's why it's so exciting for us in terms of the growth that we see ahead. We are very meaningful in the European market. We're the number one brand in Germany now in performance run. It's been a 10-year vision of ours to achieve that. And as I said, we're just getting started in China. So when we look at the total addressable market, it's a$48 billion market in terms of run. And where we invest is in the top countries where running is exploding. And so the markets that we're set up in are the ones that we're investing in. And Western Europe's a big investment. China is a big investment.

10:23And as I said, the consumer is super healthy there. It's rooted in participation. You know, what we track our participation metrics in the U.S., there's about 50 million runners that run twice a week. We think globally that's close to 200 million people that are there choosing this activity. And Brooks is winning with that consumer. So the consumer is super healthy. So on the consumer and the consumer choosing Brooks, why are they choosing Brooks from a technological perspective rather than a competitor such as Hoka or Nike? What is the differentiator with Brooks Running's technology? I love the question, Tim.

11:05This is why we exist. We're a product company first and foremost. And so innovation for the runner is why we win every single day. We spend hours, months, years researching the biomechanics of human motion. We are in the business of keeping people healthy, running farther, faster, longer. And we've been able to do that consistently. We're in our 25th year of 14 % compounded annual growth because of the position we have in products. So we win first and foremost in product. The second thing is we execute really well as a business. As you can imagine, global supply chains, we sell in over 55 countries around the world.

11:49We have developed a supply chain and an operation excellence that we think wins in every market. And that's not easy to do. That's the really hard part. And then this brand speaks to runners. We're an authentic, relevant brand that understands the journey of runners around the world. So when they're looking for a brand, they find authenticity in our brand. And that combination works in every market we've gone into. And so we often say we study our competition, but we really obsess on the consumer. And we've been able to stay ahead of the consumer in product, in execution, and with our brand ethos of let's run there.

12:30And it's working in every market we're competing in.

12:36If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions. The Cincinnati Insurance Companies. Let them make your bad day better. Find an agent at c-i-n-f-i-n dot com. Find home wherever you roam at Sinesta ES and Simply Suites, where longer stays feel comfortable, flexible, and easy.

13:19Stretch out and enjoy spacious accommodations and home-like amenities designed to help you settle in and stay productive or relaxed for however long you need. And when you're a Sinesta Travel Pass member, staying at Sinesta ES and Simply Suites means earning points toward free nights, upgrades, and more with every eligible stay. Go to Sonesta.com to book your stay and unlock the best rates with Sonesta Travel Pass. Here today, roam tomorrow. Join now at Sonesta.com. Terms and conditions apply. These days, it seems like AI agents are just about everywhere you turn, every field and every function.

13:53But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise with Okta, you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI.