Buffet takes to track to highlight shoe firm

When Warren Buffett fires the starting gun for the inaugural race at Berkshire Hathaway Inc’s annual meeting in May, he won’t simply be searching for his fastest manager. The billionaire also will be spotlighting Brooks Sports, the event’s main sponsor and a Berkshire company.

While the sneaker maker has been part of Berkshire’s Fruit of the Loom since 2006, it caught Buffett’s attention about 18 months ago at a dinner party with investment manager Todd Combs, according to Brooks Chief Executive Officer Jim Weber. The conversation turned to running and Buffett, Berkshire’s chairman and CEO, was intrigued by excited chatter about Brooks sneakers. Now Weber reports to Buffett, who added a 5km race to Berkshire’s annual meeting weekend and agreed to put his likeness on a second collection of limited-edition sneakers for the event. Brooks has doubled revenue in three years and is poised to exceed $500 million in sales this year.

The sneaker maker also has scooped market share from Adidas’s Reebok brand and New Balance Athletic Shoe by targeting avid runners.

The brand meshes with Buffett’s passion for consumer companies. Though it has only been a running company for about a decade, Brooks has a strong niche and history. The company turns 100 next year, about 45 years younger than H J Heinz Co, which Berkshire and 3G Capital are acquiring for about $23 billion. Buffett started paying more attention to Brooks after the August 2011 dinner party, where Combs and Geico CEO Tony Nicely’s wife said they ran in the shoes.

Buffett has used stock picks and takeovers to build Omaha, Nebraska-based Berkshire into a company valued at about $250 billion, with about 288,000 employees across its holdings. Its Class A shares fell 0.3 per cent to $150,500 at the close in New York.

Te US running-shoe business is a $7.5 billion market, up from $6 billion about 10 years ago, according to Charlotte, North Carolina-based researcher SportsOneSource. Marathons and half-marathons continue to be viewed as beacons of achievement, and growing health awareness has helped elevate the popularity of the easy-access sport.

At the same time, more women are running, partly because of the US government’s Title IX, which since 1972 has required publicly funded schools to provide equal athletic opportunities for men and women.

Buffett didn’t respond to a request for comment sent to an assistant.

When Weber became CEO in 2001, he was Brooks’s fourth leader in about two years and the company was “basically bankrupt,” he said. At the time, the company was owned by private-equity firm J.H. Whitney & Co Weber, who sat on the Brooks board, decided to aggressively focus the Bothell, Washington-based company on building top-flight shoes for avid runners. That meant shedding merchandise such as baseball cleats and basketball shoes, excelling at making technically sound sneakers while dropping less pricey lines and narrowing distribution to mostly specialty running stores. It was all part of an effort to gain clout with people running marathons or half-marathons.