(To receive weekly emails of conversations with the world’s top CEOs and decisionmakers, click here.)
For a long time, New Balance sneakers had the image of the “dad shoe” that fashion-forward people didn’t want to be seen in. Often associated with Steve Jobs and famously mocked by Ryan Gosling’s character in the 2011 movie Crazy, Stupid, Love, the brand’s turnaround to become a firm sneakerhead favorite was no easy feat.
Joe Preston, who took the helm at Boston-based New Balance in 2018, has been leading the push to broaden the brand’s appeal to Gen Z and Millennial consumers. So far the strategy appears to be working. The company reported a record year in 2023, with global sales of $6.5 billion, a 23% increase from 2022 and nearly double its 2020 sales. And it’s forecasting sales of around $7.6 billion this year, says Preston, who has worked at New Balance for nearly three decades.
Preston is keeping the 118-year old company close to its performance running shoe roots, partly through sponsorships of the New York City and London marathons. When more than 50,000 runners and 2 million spectators descend on the iconic five-borough course in New York City today (Nov. 3), the New Balance logo will be hard to miss.
But the company has also been expanding into athlete sponsorships across a range of other sports, from basketball to tennis, inking deals with more than 320 athletes around the world, including Kawhi Leonard, Shohei Ohtani, and Coco Gauff. That is helping it reach younger customers by increasing its visibility in sports more often associated with the likes of Nike and Adidas.
But the company lost favor with some of its young buyers when it became embroiled in political controversy in 2016. Discussing the Trans-Pacific Partnership trade agreement, New Balance’s vice president of public affairs at the time, Matthew LeBretton, told The Wall Street Journal: “The Obama administration turned a deaf ear to us and frankly, with President-elect Trump, we feel things are going to move in the right direction.” The comments prompted backlash from Trump opponents on social media, with some users posting about burning or throwing out their New Balance sneakers and others threatening boycotts. After a neo-Nazi website came out in support of New Balance, calling its sneakers “the official shoes of white people,” the company was forced to put out a statement distancing itself from the endorsement, and rejecting “bigotry or hate in any form.”
Preston spoke to TIME in September about how the company has moved on from the 2016 controversy, his strategy to appeal to new customers, and what he’s learned about leadership during his career.
This interview has been condensed and edited for clarity.
New Balance has had a dramatic shift in image, from being famously seen as uncool to becoming very fashionable in recent years. That’s not an easy thing for a brand to do. Was that part of your strategy, and how did you manage to do that as a company?
The company’s been around a long time, since 1906. It was purchased by Jim Davis in 1972 and its history is all rooted in performance running to begin with, and over, particularly the last 10 years or so, there was a concerted effort for us to try to get the brand younger. And with 65% of our business outside of the U.S., the brand has been at different stages of development. In Asia for the past decade the brand has been young, but when you get into the U.S., or even in EMEA, the brand was a little bit older. So we were trying to make a concerted effort to try to get the brand younger. The track that we chose was to get back into sports. New Balance was the first athletic brand to sign an NBA player to a million-dollar contract back in the day, with James Worthy, but we exited all those sports and just stuck to running. We re-entered sports about 10 years ago, first with baseball, and today, about 25% of Major League Baseball players wear New Balance, and that share is much higher when you get down into the AAU and other levels of playing baseball at a pretty serious level. And then we entered into basketball in 2018 with the signing of Kawhi Leonard. And that has, over time, allowed us to get younger. And we just signed Cooper Flagg to an NIL deal. We entered into global football originally through a team deal with Liverpool, but subsequently, we’ve added a number of players along the way, and we believe that getting players into our brand does two things: Kids follow those players. And secondly, you’re creating the product that they have to wear at the highest level. So it really makes you strong from that standpoint.
Lastly, apparel has been a big focus for us. And the fact that we operate 550 stores and have 3,500 New Balance stores that are licensed around the world has really provided us the opportunity to show our brand in its entirety, and we think that’s also helping to get us younger, and it’s helping us to grow our share.
Do you see New Balance’s strengths as a brand, as being more in the performance sportswear area, or as fashionable athleisure?
At its core New Balance is a performance brand, no question about that. If I look at our industry, it’s the intersection of performance and fashion, and that intersection is where the energy is. We have one of the state-of-the-art product innovation centers at the track, built in 2022, which is right outside our headquarters. And this world class facility allows us to develop product for athletes in all various sports. So performance is at our roots, but we absolutely like to be in that intersection. We like to be creating product that is visually appealing, that is culturally relevant, and that both men and women aspire to wear.
When you’re negotiating those partnerships with athletes like Shohei Ohtani or Coco Gauff, presumably there are other brands that they could be thinking about aligning with. What is your pitch?
We have more than 320 athletes globally, including Sydney McLaughlin, Kawhi Leonard, Shohei Ohtani, Coco Gauff. I think with all of them, when they look to us, we provide a more bespoke opportunity for them to present who they are. We want to align ourselves with athletes that we believe share our values, and the athletes that we choose—and we are very choiceful about it—we want to make sure that they carry themselves in the manner that we expect we carry ourselves.
You’ve been focusing on the evolution of the company’s strategy to really be meeting customers where they are. Can you tell me a bit about how you approached that?
[At the] end of 2018, beginning of 2019, we felt like we just weren’t keeping pace with the consumer. The consumer was changing the way they were interacting with brands and the way that they were purchasing. And so we came up with this motto of “control our destiny.” And controlling our destiny was all about meeting that consumer where they wanted to be. When we signed Kawhi Leonard in 2019 and then [his team] won the NBA championship, and he was named MVP, our website crashed. Three months prior to that, we made the commitment that we were going to upgrade our tech stack, so we had it underway, and thankfully, when COVID-19 hit and everyone’s stores closed, people could only buy online, and we were ready for it. That is a very good example of us trying to use controlling our destiny to try to meet the consumer where they’re at. That first interaction that many of them have with the brand is usually with their phone, to get information and to ultimately buy—whether it’s in one of our stores or whether it’s in our wholesale partners.
And what’s the next step in that?
It’s a continual journey. We have just finished upgrading a tech stack within our organization, literally two or three weeks ago. So it’s continuing to invest in ways that allow you to get close to the consumer, detect shifts in patterns and buying, and how they’re interacting with the brand—and we’re trying to stay on top of that. We also have our design teams that are out constantly looking at trends, and then we’re also always looking at how our partners, our ambassadors, can help to convey our message. And then we’ve also had some very great collaborations with some very strong brands that allow both brands to present in a little bit more of a unique way and to reach consumers in a more meaningful way.
There was a bit of controversy for the company back in 2016, when your former VP of public affairs made some comments that appeared supportive of Donald Trump, which surprised and alienated some of New Balance’s customers, and you even had to rebuff an endorsement by neo-Nazis. What did you learn from that incident?
Well, it was eight years ago, so we’ve learned a lot. The world has changed. We’ve been through a pandemic. And the long and short of it is that when we say “control our destiny,” it is entirely focused on the consumer. We preach this to our associates time and time again. Just make sure we’re focusing on the things that we can control. The world is in a very volatile period right now, and many of those things are out of our hands. We just want to make sure we’re doing the best we can to be the best company that we can every single day.
The issue at the time was related to trade and the TPP. As we’re approaching the next election, what are you hoping for from the next administration?
We’re the only athletic footwear shoe manufacturer that has U.S. footwear production, and we’ve been doing it for 75 years. We have three factories in Maine. We have two in Massachusetts. We’re in the process of building one in New Hampshire. We’re in the process of redoing our Skowhegan, Maine, factory right now. So our commitment to domestic manufacturing is really strong. We’ve also just built a new U.S. manufacturing innovation center about a mile and a half from our global headquarters. All this is a commitment for us to be a great American company and a global brand. We’re very proud about both of those things. And, as a privately-held company, we can take a long-term view, and we’re doing that with manufacturing, and we just continue to hope that the government supports that—supports domestic manufacturing.
Where does that put you against competitors, given that you’re so dedicated to producing in the U.S. and maybe a lot of others aren’t, and therefore have lower costs?
Well, a lot of them have tried it and have abandoned it. We continue to take that long-term view. The cost of producing here is higher than overseas, if you just look at the cost of goods, but there’s also time to market. If you make product in parts of Asia, and you ship it to the U.S. there’s a month right there on the water and so forth. So, there is a time to market that you save making in the U.S. But also, at its core this is our company making a commitment to the communities that we operate in. We’ve been making shoes in the Merrimack Valley area Lawrence, Massachusetts, specifically, which has struggled as a community for a long time. Our commitment to that community is more than 40 years old. And the same thing in Maine. So, there is a competitive element to it, but there’s a community element to it that is just as strong.
Do you think that is something that your customers value?
I think some do. I think some look at it for what it is, as our commitment to community and being an American company. But we’re not really doing it as much for the consumer as we are for the fact that we’re a privately held, family-owned company that believes in it.
How do you think about balancing the core values of a company, especially one that has existed for so long, with running a successful business today, and have those values evolved?
I don’t think our core values have evolved over time. I’ve been here 29 years, and there’s a lot of things different about our company. It’s mostly the size of our company. When I started, we were $150 million, and we’re going to end this year around $7.6 billion [in revenue]. And so, the size of our company has certainly changed. We now have over 10,000 associates around the world. But our core values haven’t—of teamwork, integrity, total customer satisfaction. I believe our culture is our secret sauce. It’s the thing that separates us from our competitors. And it’s something that we really take seriously. So it’s not just the results, but it’s how you get there.
Your products are something of a discretionary item. What are you seeing with sales, and what is that telling you about where the economy is right now, and how consumers are thinking?
Let me just say this, our business is really strong. This will be a fourth year in a row where we’re going to be high teens [revenue growth in percent]. It was 20-plus percent the previous three years. We’ll be knocking on that door again this year. So our business has been really, really strong throughout the ebbs and flows of the market. The market overall is not really strong. It’s hanging in there. But our business is really strong, and consumers are choosing us, because I think we’re offering a fresh approach from an innovation standpoint, from a product standpoint. We’re outpacing the market. But the long-term of the athletic footwear and apparel industry—I’m very bullish about it. You just see what people are wearing, whether it’s running, or whether they’re out casually, it’s becoming more and more of an opportunity for people to wear [that apparel] on many different occasions. So we feel pretty good about that, and our position within it continues to be strong.
What are the biggest lessons you’ve learned about leadership over the course of your career?
When I was asked to oversee our international business I really think that was formative in my leadership style, and it really helped me when COVID hit, because communication is just so important in any role, and certainly in this one. When you’re leading internationally, you’re not with the associates every day, they are overseas and they may speak a different language, may have different nuances. So you really need to have constant communication. COVID really helped us to become a global company. We were a business that had a business abroad, but that moment brought our leadership team together. We started a meeting every Tuesday morning at 7:30 in April of 2020. Four-plus years later, we’re continuing to do that. And I think that allowed us to bring our leadership team together, make sure our communication and game plan was being consistently adopted and consistently communicated.
I’m also second generation. My parents came over to the U.S. from Ireland in 1959 and education and hard work were just givens. You were going to work hard, and you were going to try to get educated. So that’s always been a part of who I am. And if you’re not moving ahead, you’re going backwards, so action is important in anything that we do.
Have you learned anything about leadership from New Balance owner and chairman Jim Davis?
Absolutely. I’ve learned a lot about leadership from Jim and Anne Davis. I’ve traveled the world with Jim, learned a lot about how to run a global company from Jim. And he’s also such a great entrepreneur, and he’s such a people person. His ability to connect with all levels within and outside the organization is always something that I’ve looked up to. And Anne is so strong on culture. I’ve learned so much about how important culture is to how the company operates [from her], and so that has become a much stronger part of what I believe in, through my experiences with Anne.
The post New Balance CEO Joe Preston on Strategy, Values, and What He Learned From the Trump Controversy appeared first on TIME.
