On the Money

Brooks runs toward 'crisis', grabs opportunity with Buffett

Running Brooks
Running Brooks

While runners focus on the miles they run, Brooks Running concentrates on going the extra mile for them.

The company's narrow focus on the performance running category is a strategy CEO Jim Weber put in place when he took the helm 15 years ago, and it appears to be paying off after a rocky stretch of bad luck. In 2001, Weber became the company's 4th CEO in 2 years, and when he took the helm the company was millions in debt.

"We saw an opportunity to focus ourselves, and we had a bit of a crisis—and running is the biggest category in all of athletic footwear and apparel," Weber told CNBC's "On the Money" in an interview.

That's no easy task when giant competitors like Nike and Adidas are aiming to be everything to athletes and consumers. Weber, however, wanted to zero in on the strongest play Brooks had: Running. He says people use the activity as a pivot in their lives to get healthier.

Running is "more than a sport; it becomes a fitness, health and wellness pursuit. And so we saw an opportunity to build a brand right in the middle of the running lifestyle."

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According to market research firm NPD, Brooks Running has been gradually chipping away at Nike and Adidas, holding a nearly 30 percent dollar share in the specialty retail market. The company also holds an 8 percent dollar share in the total measured market including Run Specialty, Outdoor Specialty and Specialty E-commerce.

And the number of runners keeps growing. Last year a record number of people, more than half a million, completed marathons in the U.S.

Brooks fortunes were boosted after the company became part of Berkshire Hathaway in 2006. At the time, its then parent company, Russell, was sold to Berkshire's Fruit of the Loom. In 2012, Berkshire made Brooks a separate business unit—with Weber reporting directly to Buffett.

"Berkshire, for us, when building a brand is the best platform you could ask for because I think Warren Buffet is truly a long term investor," says Weber. "So we're challenged not just to manage our business well - we do deliver sales and profits - but it's about building the brand over the next decade."

Jim Weber CEO Brooks Running
Source: Courtesy Brooks

With only 20 percent of their shoes sold online, the company sells mostly in brick and mortar stores. However, it's a tougher market with more customers buying online. Sports Authority is the latest retailer to go out of business.

"Shoes are selling over the internet, but at the same time there's a brick and mortar experience" with its own set of attributes, Weber said.

He added: "There [are] some really good operators out there in sporting goods, but I think you've got to bring that experience in store or the customer will go somewhere else. So it's a challenging time at retail right now."

With the biggest percentage of runners is people age 25 to 35, Brooks Running plans to take its grassroots marketing mentality to social media, while maintaining a physical presence at key events.

"We show up at literally at 500 running events a year, in some way, because runners are there," Weber said. "But they are doing all their research digitally, so we have to recreate this grassroots phenomenon in the digital realm and we are doing that."

On the Money airs on CNBC Saturdays at 5:30 am ET, or check listings for air times in local markets.