Interview: Buffett's Brooks branches out to attract gym generation
Warren Buffett, chairman and CEO of Berkshire Hathaway, prepares to speak at the Fortune's Most Powerful Women's Summit in Washington October ...
By Emma Thomasson
AMSTERDAM (Reuters) - Brooks, the running brand owned by Warren Buffett's Berkshire Hathaway Inc, believes that the U.S. marathon boom has peaked and it is looking to broaden its appeal to a younger gym generation.
Founded in 1914, the Seattle-based firm was close to bankruptcy when Jim Weber took over as chief executive in 2001. Weber decided to concentrate solely on running, a strategy Buffett bought into when he acquired the brand in 2006.
Brooks is now the market leader in the U.S. specialty running shoe market with a 29 percent share. It had total sales in 2014 of $548 million, still only a fraction of overall leader Nike's sales of $32 billion in the year to May 31.
However, the number of people completing U.S. running events peaked in 2013 at 19 million, according to trade group Running USA, falling to 17 million last year.
"We're going to change some of our communication and connection and make sure our product is friendly for the gym. Runners are doing a lot of different things today," Weber told Reuters in an interview in Amsterdam where Brooks is sponsoring the European Athletics Championships.
He said millennials -- those aged 25 to 35 -- were increasingly trying out sports such as aerobics, cross fit and yoga and that his company would respond to that trend.
"They are still buying running shoes but they are not defining that as their main activity," he said. "We're not losing sleep. People are going to be active."
He said the fact millennials were starting families later could mean that they could eventually adopt running. The sport suits people with children as they can fit it into their busy schedule and it is not expensive.
Weber said running was still huge, with 120 million active runners worldwide. Participation is growing fast in Europe and China, and the women's market is booming. More than half of the shoes Brooks sells in the United States are now to women.
"We are smiling about market share growth opportunities, even as growth slows in the category," Weber said.
Brooks, which makes a popular line of sports bras in the United States, sees room to sell more clothing, which only accounts for about 20 percent of revenue now, as well as more retro lifestyle shoes.
Weber suggested the "heritage" range that Brooks launched in its centenary year in 2014 -- fashion shoes usually sold at a lower price point than its performance running models -- could even reach sales of $100 million in five years.
He said Buffett had a long-term commitment to build the brand, despite ups and downs like the strong dollar.
"He is cheering us on to build it out globally and we think we've got tremendous opportunity to do that over the next decade," Weber said.
(Editing by Keith Weir)