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Let's take a look at Brooks Running in the first quarter. Brooks running reached record quarterly revenue with global sales growing 15% year-over-year and 13% growth in North America. These milestones coming alongside uncertainty in US trade policy and sliding consumer confidence. Dan Sheridan, Brooks Running CEO, joining us live from Nebraska for its parent company Berkshire Hathaway's annual meeting. I'm also joined by my Morning Brief co-host, Brad Smith. Uh it's great to speak with you this morning, Dan. Talk to me about the extent to which you are anticipating these tariff policies hitting your business. And in January, you told our network that you were already concerned about the headwind, and that was before triple-digit tariffs on China.

Yeah, good morning. Thanks for, uh, having us. We're joining you here live from the Berkshire Hathaway shareholder meeting. Uh, we just finished a great quarter up 15% globally, and uh, and our demand signals are incredibly strong. But we've got a lot of uncertainty ahead of us with, uh, with the tariffs. And so we're going to work on it, like every business when there's uncertainty. We're leaning into our partners in Asia. Uh, we're thinking a lot about the markets we compete in, uh, and obviously price increases are a part of that. So uncertainty ahead, but we feel really good about the category that has been durable in, in times of economic uncertainty. And, and we think it will be here too.

We we've heard from representatives, Dan, in the past, from Brooks Running, saying that running is recession resilient. But is it tariff resilient as well, considering how consumers are clearly shifting their own sentiments, knowing that they're going to be potentially paying a lot more for normal things, and that includes running shoes?

Yeah, great question, Brad. I think the way we view this is that, you know, this is a considered purchase. Performance running gear for runners is super important. And so what we've seen over time is it is recession proof, uh, in times of economic uncertainty. We've actually grown every single time. Go back to 2008, uh, even in 2016-17 and obviously COVID. So we believe the category will hold up. Um, but we know that there's sensitivity to price in our category as well. And so we're paying attention to that. We're being smart and how we, uh, how we think about pricing around the world.

Knowing the, the, the arm's length that you have to Warren Buffet and the business, what is he advising the business right now, especially knowing that companies have the difficult decision of trying to figure out, do we absorb the tariffs? Or is that something to, we pass, that we pass on to the consumer? And, and how are you thinking about that? Do you need to pass that cost to the consumer?

Yeah, I mean, I, I think the beauty of being a Berkshire brand is we always think long term. So even in times like this, we're thinking, you know, three, four years out. And I think that's important in times of uncertainty. So Warren's sage advice to us over time is focus on your customer, which we're going to do. Uh, and so as we look at the landscape and what tariffs are bringing to our business, we'll continue to consider how it impacts our customers, our partners, our retailers around the world. And I think it's super important for us to stay focused on the customer.

Dan, are you raising prices in response to tariffs?

Yeah, we'll have some slight, uh, price increases. Um, we're trying not to overreact, right? Because of the uncertainty, we don't know which way the tariffs will go. Um, and, uh, and so we're trying not to overreact. And, and the truth is, we're looking at the entire supply chain at Brooks to get smart on cost optimization and efficiency and, and I think most businesses are going to do that in this time.

And, and I know you mentioned that you are going to raise prices. How are you thinking about the degree to which you need to raise those, especially as negotiations are ongoing?

Yeah, it's a tricky one, right? Um, I think what we do is we focus on obviously the competition and the market we play in. We're the number one brand in performance run here in the US. And so we have some pricing power, but we don't want to punish the consumer because of these tariffs. So we have to be pitch perfect in this. And, and we're looking at prices right now. We think, you know, in, on average, it'll be probably 2.5 to 3% increases on select styles, not every style. So, um, I think we can navigate this, but, uh, obviously there's a lot of uncertainty for us.

Dan, um, um, we have to hustle to the finish here, and I know that you're sneakers on the ground there in, uh, at the Berkshire Hathaway meeting. And so as you're kind of thinking about the business right now, has the risk of tariffs changed where you're sourcing materials from in supplies to, to build out and manufacture shoes? And then just lastly, on the back of that, which shoes is Warren Buffet wearing?

Well, um, so in terms of the supply chain, look, we're, um, we're somewhat fortunate because we've moved our, uh, our supply chain to Vietnam and Indonesia, not immune to the tariffs, obviously, but to some less degree than, than the, the China source base. So we've got a really nice, resilient, and agile supply chain right now. However, global trade war could change that. You know, um, I think Warren's probably wearing the most comfortable shoes in the, in the, uh, expo here. And, and I, I would assume they're Brooks, but I haven't seen him yet this morning.

Uh, sneakers go well with some suits. I try it. I try to pull it off, Dan.

I love it, Brad.

All right, Dan. Thank you so much. Appreciate your time, and also thanks to our own Brad Smith.