Jim Weber, CEO of Brooks Running, talks about the 25% YOY growth, and why sustainable footwear is a main focus for the brand and consumers. 

Opening Bell

Brooks Running Surpasses $1 Billion in Revenue in 2021

Welcome back shares. Opening Bell. The shoe brand brooks running ended last year with a 31% year over year growth in revenue as more runners took to the road despite supply chain disruptions and material sourcing challenges brooks managed to exceed $1.1 billion in annual revenue for the first time in the brand's history, experts believe the global footwear market could reach around $440 billion by 2026. And joining me now is jim Weber ceo of brooks running. Jim glad to have you on this morning, Brooke sold 25% more pair of shoes globally in 2021 compared to the prior year. What do you attribute this? This jump in sales too? Well, we've been focused on the runner, Alisa, thank you for having me this morning. I think for us it's always been about performance products, you know, the runners have so many choices and brands and products and we've been focused on the biomechanics of human motion and running. So our product has been fantastic. We've doubled our business since 07, But you know, over 10 years ago we set a goal and we thought a performance running position with this run. Happy, celebrate everyone's run whether you're going after an Olympic podium or it's your first five K. That's how we're positioned in this marketplace and we just think it's resonating with runners more than ever before. So reaching the billion dollar milestone is just a huge achievement for our team and it reflects focus on our customers, do you think part of that is kind of a tailwind during this pandemic in terms of, you know, people being more health conscious, potentially even running just being a solo sport that people can utilize amid a time where we're seeing gym closures and then the overall kind of athleisure trend that we have seen amid the pandemic and likely even beyond. No question about it, I think the pandemic brought to everyone the reality that running was just outside your door, whether it was walking, hiking or walking fast running, it was accessible and convenient and doable in this crazy pandemic that we've been through. So there's no question that that reminded people that the run was out there even with the events closed, but we think it's created a secular growth trend in running. And we've seen that recessions before people get into the habit of moving and they tend to stick with it. So we're excited. We think even when this fantastic consumer environment that we're in households are spending so much money right now, we think even when that levels out that running is going to continue to grow through this decade, you know, makers in the apparel and footwear industry, like other sectors really kind of the global economy, they faced a number of challenges. One being obviously raw material sourcing and labor shortages, where does brooks stand with these issues and how have you been able to kind of navigate these challenges to the point where you were able to hit record revenue last year. It's an incredibly challenging environment right now, and the biggest factor I think we're seeing in apparel and footwear with so much of our production still coming out of Southeast Asia is. Covid. Quarantines are still impacting production. That's the biggest issue we have, yes, there are material shortages, logistics and moving products are really much more difficult than they've ever been. But in many of the factories in Vietnam, our industry lost several months of production and you just don't make that up. We would have hit, um, you know, even even stronger growth in the cute in the fourth quarter than we had if we could have fulfilled demand and we're going to see those supply constrained conditions continue through at least the middle of this year, but, but you know, the key is demand is healthy and, and we're doing everything we can to supply runners um, with the products that they need. So right this year, for example, you know, we're forecasting mid teens growth to about a billion three to a billion five. But the truth is we could hit 30% this year if we could supply it and we're going to be in that environment for the balance of this year, I believe. Now, imagine a big part of the strategy in terms of growth, uh, you know, last year and even moving forward is that your online strategy, but specifically with that, I wonder how was it aiming to kind of get market share away from other brands like, you know, sock me and I think new balance, you know, it's interesting. I think the runner again has so many choices and they shop everywhere often their shopping experience starts digitally. So we've invested heavily in digital engagement and it's critical and much of that comes through our e commerce site that we own, but through our partners, e commerce sites. And then what's so interesting in in 2021 as we saw customers return to stores and because of our multi channel approach in the running marketplace, runners, it's very big and diverse category and people shop everywhere. Um we're fully committed to this multi channel approach and because of that digital ramped up in 2020 stores came back in 21 it's actually more balanced right now. So we're competing for the runner everywhere they shop and engage and uh, and and many other brands are doing that, but I think we're doing it better than anyone else across the channels of distribution and, and we think that's how you reach runners. So we're excited about our opportunity to continue to grow. And speaking of opportunities to continue to grow, I want to talk to you about ghost 14, this is Brooke's first net zero carbon shoe, what was brooks, you know, how was brooks able to make kind of this carbon neutral and how is demand for for a more sustainable product likely goes 14, you know what, we think it's going to be table stakes every year that goes by more and more of our customers and runners are interested in, what's the carbon footprint of the products we're building, What's our carbon footprint as a company. So we're committed under the climate pledge to being carbon neutral in 2040 and the ghost is a milestone in that progression, with about 56% recycled materials in the upper plus high quality carbon offsets for the balance of the product that we haven't been able to solve yet for carbon neutrality, that shoe is the first high volume shoe in the running category that reached that carbon neutral status. So it's a milestone on a long road to address the car, the carbon issues, but we think it's essential and it's going to be table stakes for our customer really quickly before I have to let you go here, I just wonder how important do you think sustainability within the footwear market is both from a consumer perspective and in terms of, you know, operating costs, You know, I think the operating cost is going to be a puzzle, but that's where innovation comes in automation, new materials, recycled materials, better circularity streams that were beginning to test on recycling products and and getting the materials back into new gear. Um, and we need to solve that in our industry. So I think it's a big issue and it's not an easy solve, it's very complex, but over the next 20 years, you know, we're committed to solving it for for our products and running and I think the consumer is going to expect it and the Earth needs it. I mean we just need to be able to use less and have a lighter footprint and impacting the earth. Jim really appreciate your insight, congrats on the record revenue and the growth the company has seen last year. Hopefully, certainly that continues to move forward into next year. Jim Weber Ceo of brooks running.