Footwear Insight

10 • Footwear Insight ~ November/December 2018 Brooks Targets Big Growth in 2019 footwearinsight.com B rooks is firing on all cylinders, but looming tariffs will be a headache in 2019, according to Jim Weber, CEO of the Seattle- based running brand. Brooks finished the third quarter with global revenues up 29 percent, led by a 32 percent increase in footwear and double-digit revenue increases in the EMEA, Asia-Pacific and Latin America regions. Weber credits a product refocus on performance for the gains, saying last year's revamped Glycerin and Ghost styles and 2018's Adrenaline and Transcend franchises won over shoppers in a market where performance has been given short shrift. "As you know, our category has been unsettled in the past three years, and we hit a sink hole in '15 and '16 — participation was down, there was retail disruption. We took a hard look at our assumptions and reinvented some of our product lines," he says. "And we think performance is timeless. Fit, feel and ride always matter: always, always, always. And I don't think the other [big] brands are focused on performance." Weber is projecting double-digit growth for 2019, driven by the performance category and aided by moves the company is making internationally. This year saw Brooks launch into India and relaunch in Korea, with a push into Mexico expected before the end of the year. China, Weber adds, is on the table for late 2019. "In Asia, we're in a development mode," he notes. But Weber says the brand is bracing for new tariffs in 2019, specifically by a new duty applied to China-made goods expected in spring. "The tariff on athletic footwear is 20 percent out of China and it's highly likely they'll be an additional 25 percent added in February, which means 45 percent tariffs on running shoes made in China," Weber says. "And the options aren't great." Simply absorbing the duties could cost the brand an additional $20 million a year, he estimates, and he says the brand isn't going to raise prices — in line with announcements by other brands. Brooks is actively working with its factory partners in China to move production elsewhere, Weber says: "We have to take our time and make long-term decisions." — Jennifer Ernst Beaudry RUNNING ACQUISITION THE FOOTWEAR EYE No Timetable Set on Canada Goose Footwear FOOTWEAR FOR CANADA GOOSE may be coming eventually, but there's no date set yet. That was the word from Mark Hubner, VP of Baffin (pictured at left), on the show floor at Outdoor Retailer in early November. Baffin was acquired by fellow Ontario brand Canada Goose in early November for C$32.5 million ($24.8 million). Analysts were generally positive on the acquisition: Canaccord Genuity analyst Camilo Lyon wrote in a note that "Baffin does provide GOOS with valuable shoe making expertise and infrastructure, clearly indicating GOOS' forthcoming entry into the category and furthering its position toward becoming a lifestyle brand." But Hubner said the two brands hadn't set any more definitive plans — it's still just a conversation, he said: "We want to start talking strategy." Brooks Adrenaline GTS 19

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