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CEO of Berkshire’s Brooks Running expects sales to rise despite pandemic and supply disruptions

Band Jonathan Stempel

OMAHA, Neb., April 29 (Reuters)The longtime chief executive of running shoe maker Brooks Running, a unit of Warren Buffett’s Berkshire Hathaway Inc BRKa.Naims to more than triple revenue over the next decade, weathering the effects of supply chain disruptions and a lingering pandemic.

Jim Weber, 62, who has managed Brooks since 2001, said in an interview on Thursday that Berkshire management gave him the freedom to play the “long game”.

He said it has helped Brooks avoid spending cuts and layoffs even as the COVID-19 outbreak in Vietnam, where it makes most of its shoes, recently forced it to close 45% production for three months.

More people have turned to running during the pandemic as they look for safer ways to exercise, including outdoors.

Despite signs that running participation is “stabilizing” as more people return to gyms and resume other sporting activities, Weber said he expects continued growth in numbers. of people around the world who run for sport or fitness.

“In the global economy, there are a lot of challenges but a lot of economic success, creating a middle class that is more actively investing in themselves, in fitness,” Weber said. “Running could double in the next 10 years to reach 300 million people.”

In 2021, Seattle-based Brooks grew revenue 31% to $1.1 billion and sold 25% more shoes than a year earlier, fueled by Ghost and Adrenaline GTS performance shoes. more sold.

Weber said sales could reach $4 billion within a decade, despite competition from bigger rivals such as Nike Inc. NKE.N.

He also said Brooks is planning further expansion in Europe, where he believes sales could double by 2025.

Part of this growth may come from improved footwear.

After successfully introducing external supports known as GuideRails to the Adrenaline and other stability-focused shoes to control excessive movement, Brooks plans to introduce nitrogen-infused technology into the midsole of its more expensive glycerin to reduce weight and increase cushioning.

“The people who need the best technology are the average runners, the casual runners,” Weber said. “Every runner deserves performance.”

Weber said the pandemic-related disruptions increased shipping costs and doubled the time it took to move shoes to U.S. fulfillment centers from the factory.

He said the pandemic has also highlighted how a “single point of failure”, such as a quarantine or even a cyberattack, could disrupt business.

Brooks plans to move some production to Indonesia over the next two years, while keeping a majority in Vietnam.

“The virus is with us,” Weber said. “We’re going to have to live with it.”

Weber said Greg Abel, the Berkshire vice president to whom he reports, follows Buffett’s playbook on long-term thinking.

“So many public companies are on a forced march to make their numbers every quarter,” he said. “[We are] able to look the road and play the long game. It’s hard to estimate how powerful that is.”

Weber put the brakes on his own race after being diagnosed nearly 4½ years ago with esophageal cancer.

He is now cancer free. No longer able to run six-mile races on weekends, he instead does intervals on the treadmill or alternates between short runs and walks outside.

“That’s not what I want,” he said. “But you take what you have.”

(Reporting by Jonathan Stempel in Omaha, Nebraska; Editing by Diane Craft)

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