By Jonathan Stempel
OMAHA, Nebraska (Reuters) -Brooks Running, which is owned by Warren Buffett’s Berkshire Hathaway, is committed to keeping production in southeast Asia even if U.S. President Donald Trump’s proposed tariffs mean consumers will pay more for its performance running shoes, its chief executive said.
Dan Sheridan, a 27-year Brooks veteran and chief executive since April 2024, in an interview at Berkshire’s annual shareholder meeting noted the risks of higher tariffs on Vietnam and Indonesia, where Brooks makes its shoes.
For now, Sheridan said the Seattle-based company founded in 1914 is modeling that Trump’s blanket 10% import tariff sticks.
The outlook is less clear if Trump implements his threatened respective 46% and 32% tariffs on Vietnamese and Indonesian imports. Brooks produces 85% of its shoes in Vietnam and the remainder in Indonesia.
“When the election happened, we were already assuming that tariffs were coming,” Sheridan said. “But we are committed to those countries. Southeast Asia makes the best performance running shoes, and so we’ve spent 20-plus years with partners that we trust.”
Sheridan spoke with Reuters on May 2, one day before Warren Buffett announced his plan to step down as Berkshire’s chief executive.
Brooks said revenue including from apparel grew 9% last year to more than $1.3 billion, and believes revenue could rise to $1.5 billion this year.
While 80% of revenue comes from North America, China is a particularly fast-growing market, where, according to Sheridan, almost 70% of sales come from the $200 Glycerin Max, its second most expensive shoe.
PRICE HIKE COMING
U.S. consumers will soon feel even the 10% tariff. Sheridan said Brooks told retailers the price of its top-selling Ghost will rise $10 this fall to $150, a level he said was appropriate for the shoes and wouldn’t hurt demand.
A 46% tariff would be something altogether.
“Like most people and most business leaders, we were a bit shocked,” he said. “We had been working on models of increasing tariffs, but we did not model a 46% or 32% tariff. The market wouldn’t take a 46% price (increase).”
Last week, Brooks was among 76 footwear brands that signed a letter from the Footwear Distributors and Retailers of America trade group that asked the White House for an exemption to reciprocal tariffs, saying it posed an “existential threat” to the U.S. footwear industry.
Household names like Nike, Adidas and Skechers were among the signers. Another Berkshire-owned footwear company, Justin Brands, also signed.
But Sheridan said earlier periods with heightened economic uncertainty showed that people will keep running. They may give up the gym, he said, but not the road.
“It’s something of a recession-proof category,” he said. “There’s a ton of uncertainty on the supply chain side, but we believe there is less uncertainty in participation.”
EXPANDING THE BRAND
One area where Brooks is cutting back: hiring.
“Where there is uncertainty on the outlook, the best businesses tighten their belt,” Sheridan said. “We haven’t stopped hiring, but we’re being very strategic in the roles we hire.”
Brooks remains committed to expanding the brand, and may add additional partnerships after establishing marketing alliances in 2024 with Disney and the Seattle Kraken hockey team.
And while Brooks eschews chasing fashion trends, its Max shoes incorporate the oversized midsoles now more widely found in shoes of rivals such as Hoka and Asics.
But Sheridan said such shoes should offer biomechanical benefits to runners, not simply look good or different.
(Reporting by Jonathan Stempel in Omaha, Nebraska; Editing by Mark Porter)
