Brooks surpassed $1 billion in annual sales for the first time in 2021, expanding 31 percent year-over-year after climbing 27 percent in 2020. Playing a critical role in driving that growth has been Dan Sheridan, who was recently promoted to President and will partner with CEO Jim Weber to drive the next phase of the company’s growth.
Sheridan, a 24-year Brooks veteran, was promoted to COO in 2019 and retains that title as President.
In guiding Brooks’s supply chain and operations, IT and digital product functions, Sheridan has led Brooks’s digital transformation vital to navigating the industry’s supply-chain disruptions. As President and COO, he adds finance, strategic planning, legal, and risk management oversight for the brand.
Here, Sheridan discusses the company’s momentum, how the brand mitigated many of the pandemic-driven headwinds, and what’s next.
What excites you about your new role? There’s plenty to do. We’re in a very fortunate situation where we have a growing business here in the U.S. and Canada that is the foundation of how we built this strategy, and we’re looking to expand this strategy worldwide. We know that running is growing at an incredible rate. We saw significant growth through the pandemic and opportunity in our European business. We’re launching our brand in China this spring. So we have plenty of work to do regarding how we scale this strategy. I’ll be spending a lot of my time building this strategy out for the next three to five years within our core markets in the U.S., Canada, Europe, and China.
Has Brooks outperformed the market over the pandemic, or is it a case of where all boats are rising? We’ve taken market share. On the SRA (specialty run accounts) side, we continue to have the number one position within specialty run in the U.S. At the national account level, we accelerated growth with key accounts in the U.S. and worldwide, but we have what I would call the next running boom pushing all of us in the industry. It started with the pandemic as more people were walking and running, and Brooks was just perfectly positioned to take advantage of the trend, or what I call a jet stream because we’re focused on running. This 20-year strategy may seem like an overnight success, but it’s 20 years of Brooks focused on running. We continue to stay diligently focused on the performance-run product through our biomechanical work and runner insights that we’re plugging into. So, it was a little bit of a perfect storm for us. Macro trends pointing to this sport and our intense focus on it have helped us gain market share and grow with the trend.
How has Brooks managed supply chain disruptions? In July 2021, we started seeing signals where COVID was impacting our facilities. The first thing was to work with our partners to make sure all of our people in those facilities were safe, but we immediately saw facilities shutting down. That impact was massive, as it has also been for the industry. We went to work quickly on how to mitigate those risks that are showing up today, and we’re probably at the worst part of our supply chain disruption now. But we’re starting to see the light at the end of the tunnel. We see that because of the work that we’ve done with our manufacturing network in Asia. We’re expecting a gradual climb back over the next three-to-four months to meet our demand through supply. We are still dealing with a supply shortage for all the markets worldwide, and it will be the end of Q2 start of Q3 when we begin to be able to fulfill the demand in the marketplace. That’s not a great position to be in, obviously, but the silver lining is that Brooks has incredible demand for its products throughout all the markets we’re in, and as soon as we can get our supply back up to an adequate position, were going to see just incredible growth in the back half of 2022.
Can you talk about your multi-channel distribution strategy and how that helped mitigate the disruption? We’ve built a strategy specifically focused on runners. So when we think about supply chain disruption, we’re wired into how we manage our channels, and we believe that the right way to go to market in run is through a multi-channel approach. We think that it’s a mix of our direct channels, the retailers worldwide that we partner with and our general sporting goods partners around the world. We’ve done an outstanding job of wiring all of those strategies into our retailers’ digital businesses, so whether it’s their sites or the marketplaces that we’re working with through our retail partners, this multi-channel strategy we think is winning the runner. For example, when COVID hit and stores were shut down worldwide, we had the agility within this multi-channel strategy to point demand to retailer sites, to marketplaces and to brooksrunning.com to capture that running demand. And the minute stores reopened, we switched and pushed that demand back to stores and saw our retailer’s store business continue to grow. We have flexibility and agility in this multi-channel strategy.
Many brands talk about digital transformation, but Brooks works differently by working Locally to help running shops benefit from online growth. What does digital transformation look like for Brooks? It attaches to this multi-channel strategy. We know that runners shop across channels but, more importantly, they research brands across different channels. They research brands in different ways. Most of the time, it starts with a digital transaction—a search for a product or a brand. From there, we have to help them find our brand across channels. We’ve decided to focus on where our brand shows up digitally. We first re-vamped brooksrunning.com from both a look and feel of the site’s design and the backend. That gave us a great foundation to plug omnichannel programs into our multi-channel strategy. So when COVID hit, we didn’t have the capability to buy online, pick-up in-store, same day. We were able to do that through Locally because of our work to integrate these partners into this digital transformation—the same thing with ship from store, same day. So same-day delivery was a new capability that we could bring to our strategy when COVID hit. Transformation is an umbrella in which we’re plugging in many programs to service runners and retailers. It also goes as far as our employees and what we can do to make their jobs easier and much more execution-focused.
Can you elaborate on how you see the digital shift impacting Brooks? Right now, over 80 percent of our revenue comes from a physical store, a retailer website or a marketplace. We don’t envision that this mix will change drastically for our brand in the future. Knowing that, we’re working hard on what we think the right mix is for our brand, but we aren’t putting our thumb on the scale for BR.com. We know through survey data that most runners start their research journey at a branded site. We know that our site has to be a great experience, but we also know that our conversion is right around 3 percent on our site, so 97 percent of consumers are going somewhere else. The priority for Brooks is to make sure that our site is premium, it’s got great content, it’s easy to navigate, and then ultimately, a runner can find our product online and offline in a store. We’re trying to create a great customer journey for the runner that will drive growth throughout all channels. And that’s important for us because we believe running is a local sport. It’s a collection of 10,000 retail stores worldwide that all have their community of runners, and if we can execute on behalf of those stores, we think we’re going to win the runner more than lose them. And so we’re having incredible growth through our online channels, whether that’s br.com or retailer sites, but that’s not the ultimate goal. The ultimate goal is to win the runner every day where they shop, where they research or where they try brands.
What are some product highlights? We’re a product company, and it’s first and foremost wired into the biomechanics of human motion. In the last seven or eight years, we’ve plugged in what we call runner insights and created a group that goes after not only the needs of runners but what runners want. So not only specific to product but around the lifestyle of the run and reaching the head and the heart. Out of that comes our two franchise styles, which are number one and number two in the U.S. market—the Ghost and the Adrenaline GTS. These franchise styles continue to be meaningful in runners’ lives season after season. And we’re continuing to invest in innovation.
We’ve got a lot going on in our BlueLine innovation lab. This last year, we launched the Aurora BlueLine, which was cutting-edge biomechanics in product engineering. It launched our latest technology that’s coming out in the Glycerin 20 and Caldera 6 this year, called DNA Loft v3. It’s a nitrogen-injected cushioning compound. We’re excited about what it can do from a cushioning and performance-run property perspective. And then we’ve got a ton going on in apparel. Our apparel business grew over 30 percent last year, and we’re focused on our run bra collection. We believe that we’ve got a product engine that can win the runner, and it’s rooted in performance. But now, we’re plugging in not only to the needs but the wants of runners worldwide.
What’s your take on the benefits of running from the pandemic? We believe that running can change your day your life, and all added up, it can change the world in terms of physical and mental health and wellness.
At the start of COVID, participation in the sport accelerated month after month. We all saw it in our neighborhoods that more people were out running and walking than ever before as gyms and studios shuttered. We think that has kicked off another running boom for the world. We conducted surveys of runners and found that respondents who were running several times a week started running more frequently. And those respondents that had fallen away from the sport were coming back to it. So participation in our core markets remains sticky, and we think this could be a 5-to10-year running boom for the industry. We’re also seeing it in our retail numbers. For the long term, we think it’s good for our strategy, but it will help us confirm that running is the eternal hope for health and wellness.
Brooks reached $1 billion centered around run. Will the brand be looking to branch out to pursue its next milestone? Performance run is the largest sporting goods category globally. So when we add up the addressable market for run worldwide, it’s over $30 billion in retail sales. We think we have plenty to do in the strategy that we are executing right now. We can grow within our core markets here in the U.S. and Canada. We’ve doubled our EMEA business since 2017 and think there’s another double for us there. And we are small throughout the Asia Pacific Latin American market. We’ve got room to grow. We have great competitors worldwide, but we think that this brand translates in every single market that we’re set up in. We’re heads down on run.
Photos courtesy Brooks Running
