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29 Dec

CEO Talks: Latest Balance Chief Joe Preston Hopes to

Joe Preston is a Latest Balance lifer.

The president and chief executive officer of the sports brand has been with the corporate for 27 years. Over the course of his profession he has served in a wide range of roles, including overseeing the Asia-Pacific and international operations and leading its global product and sports marketing initiatives.

He ascended to the highest position in 2018 and since then has been working to double the corporate’s sales — that are expected to hit $5 billion this yr — by partnering with up-and-coming athletes and cultural influencers to draw a younger consumer while never losing sight of the corporate’s roots in performance running.

Here, Preston, who can be honored by the American Apparel & Footwear Association on the 2023 American Image Awards Gala in April, talks about what makes Latest Balance unique and its growth strategies for the longer term.

WWD: You’ve been with Latest Balance for quite a while. You will need to have seen lots of changes through the years.

Joe Preston: I’ve been here since 1995 when the corporate had sales of $150 million with most of it within the U.S. We went on an actual growth spurt between 1995 and 2000/2001, by which we grew to about $1 billion within the U.S. Then our next phase of growth was international. By the point we reached late 2008/2009, we were about $2 billion. After which over the following 10 years, we reached $4 billion. Then COVID[-19] hit and all our stores closed in every single place across the globe and we got here back to about $3.3 billion.

WWD: Where are you today?

J.P.: In 2021, we jumped back as much as $4.3 billion and in 2022, we’ll find yourself over $5 billion. What’s modified has been the expansion and expansion globally. Today we’re about one-third within the U.S. and about two-thirds outside of the U.S.

WWD: How much of your enterprise is footwear versus apparel?

J.P.: We were predominantly only a footwear company for a lot of, a few years. But as we began to expand internationally and moved into markets where there have been no third-party retailers, we opened Latest Balance stores and we wanted to be sure that we developed our apparel capabilities. So today, apparel accounts for about 20 percent of our overall footprint and we expect there’s huge potential there.

WWD: What hasn’t modified?

J.P.: It’s still a family-owned business. Jim and Ann Davis have been operating it for the reason that ‘70s. Jim bought it in 1972. And that remains to be a core a part of our culture and commitment to community.

WWD: You became CEO in 2018. How have you place your mark on the business?

J.P.: We had a powerful run from 2012 to 2015. After which we were mainly flatlining through ‘18. And so after I became CEO, in October of ‘18, we tried to hit a reset on how we were going to operate, the categories we were going to give attention to. And we put together this mantra called: “Control our Destiny.” This was pre-COVID[-19]. And that was all about getting closer to the patron and controlling the things we could. We’ve long been a extremely good wholesale partner but whenever you operate direct-to-consumer, it means that you can catch up with to that consumer. You’ve a direct connection, you may understand where and the way you must pivot. In order that was a key point for us. We began this whole digital transformation before COVID[-19] that served us well as we got here back into 2020. Mainly all of our business was online during those months when all our stores were closed. So we mainly rewired the corporate on the front end, from a design and development standpoint, after which the back end, all through our supply chain. And we’re still within the midst of it. We predict it’s going to proceed to revolutionize how we operate.

WWD: What lessons did you learn through the pandemic?

J.P.: The most important thing is that it really allowed us to operate more like a worldwide brand. We began a 7:30 a.m. Tuesday morning meeting that we still have today with our functional leaders in our geographic areas all on the table online. And it really allowed us to develop our motion plan. We also implemented the “Agile Methodology,” which is often used just in technology. But we brought it into our leadership team. What we were doing is running 30-, 60- and 90-day sprints by which we’d have leaders who had the authority, autonomy and accountability to develop motion plans inside that point period. And so it allows us to actually accomplish rather a lot and I fundamentally imagine that’s the explanation why we’re within the position we’re today.

WWD: You used to rank third behind Nike and Adidas in performance footwear. Where do you stand now?

J.P.: It’s a bit of hard to delineate between what’s performance footwear and what’s not. However the goal that we set within the 2012 to 2015 timeframe was to be the number-three athletic brand. That’s what drove us entering categories aside from running. Around 2012, we entered into baseball and signed Dustin Pedroia [formerly of the Boston Red Sox] and a few other players. And today about 25 percent of Major League players wear our brand. And if you happen to go to any of the AAU [Amateur Athletic Union organization] games across the country, you may see Latest Balance everywhere in the field. In order that also gave us confidence that we could move beyond what our core had been.

Los Angeles Clippers small forward Kawhi Leonard is a Latest Balance ambassador.

WWD: What got here after that?

J.P.: We reentered basketball and signed Kawhi Leonard. And today we’ve got a handful of NBA players which can be on our roster of athletes. Then we entered global football, or soccer — first with a team deal, then with two of the arguably top five players on the planet with Sadio Mane [who plays for Bayern Munich] and Raheem Sterling [who plays for Chelsea in the U.K.]. So now we’ve got running, basketball, soccer — those are the core categories for us. But running is clearly a giant one in our roster of athletes: Sydney McLaughlin for one. She’s the world record holder [in the 400-meter hurdles], and I believe that’s allowed us to strengthen our performance credibility as we branch out.

WWD: You’ve got some newer running shoe brands resembling Hoka and On which can be making big inroads amongst consumers. How do you retain up with these upstarts who need to take market share from you?

J.P.: I believe you might have to have teams which can be focused in specific areas. For instance, our running team is an experienced group. And it’s not about design. It’s about development. It’s about engineering. And it’s also about the way you’re servicing the running specialty retailers here within the U.S. and throughout Europe. You’ve got to actually stay on each one in all those categories, you’ve got to get up day-after-day and live it. Now we have teams like that on other categories too, including lifestyle — individuals who look specifically at what the present trends are and where they’re going. And applying those is a key a part of trying to achieve success.

WWD: Where have you ever had probably the most success as you branch out into other sports?

J.P.: Baseball has been an enormous success for us. But with all these other categories that we’ve entered, it is 2 things. First, it’s the credibility from the performance standpoint, after which it’s the connectivity with the younger consumer. And that has allowed us to sell not only the performance basketball shoes or soccer boots, it has also allowed a crossover to our lifestyle product. In lifestyle, the energy is coming partially from those athletes in addition to entertainment ambassadors that we’ve got. The way in which our marketing and brand teams have brought those stories together together with our product teams that are creating silhouettes and color and materials which can be trend-right, is delivering significant momentum for the corporate.

WWD: Let’s talk a bit of more about your lifestyle product. You’ve collaborated with lots of different people including Todd Snyder, Kith, and Stone Island. How do you make that jump without alienating the client who has been running marathons in your shoes ceaselessly?

J.P.: I’m not afraid of us alienating someone who’s been buying our performance trainers for years. And as long as we’re continuing to deliver the fit, the texture and the performance of those products, we must always give you the chance to retain them. The collaborations that we’ve got done brought great energy to the brand. We’re very selective in who we work with and the way they’re delivered to market. And I believe that’s a vital element. There’s lots of diligence and execution from our brand and business teams to be sure they’re brought forward with authenticity. And that’s been quite successful.

WWD: Which of them have been probably the most successful?

J.P.: We’ve had a relationship with Ronnie [Fieg] of Kith for a very long time. And our relationship with Teddy [Santis] of ALD [Aime Leon Dore], as creative director of our Made in USA line, has been excellent. With all our collaborators, we’re attempting to work with corporations and individuals that we expect share our brand values.

WWD: You mentioned Teddy Santis. What does he bring to the table and where do you see the connection moving into the longer term?

J.P.: He brings out the core authentic values of our brand. I take a look at his design language and it’s so strong and clear. And he’s brought that to our Made in USA footwear and apparel items. He’s been an important partner.

WWD: Other brands have had problems when their celebrity ambassadors go off the rails. How do you discover who you should work with and ensure they’re the proper fit?

J.P.: Now we have a sports marketing team and a brand ambassador team, so that they are always taking a look at who’s on the market and who we expect could be an important fit to team up with, whether it’s a selected product collaboration or someone we expect could be good to team up with. Our mantra is to be fiercely independent. Sometimes it may well be easier for athletes or brand ambassadors simply to go together with the largest brands on the market. But we expect we provide a bespoke approach that enables them to indicate their personalities. I believe many have seen the way in which we’ve got executed our brand and marketing efforts and that builds upon itself.

WWD: Who’re a few of your hottest ambassadors today?

J.P.: Jack Harlow, the musician. He was a Latest Balance fan before we entered into an agreement with him. And he’s been great.

WWD: Anybody else in your wish list?

J.P.: There are rather a lot, but they wouldn’t let me back within the constructing if I told you. However the intersection of sport, fashion and music has lots of energy and we expect there’s a chance for us to proceed to try to search out synergies in an authentic way for our brand.

The Latest Balance headquarters in Boston.

WWD: Who’s your customer and what’s the breakdown between men’s and ladies’s?

J.P.: It’s getting a bit of hard to reply that query nowadays due to unisex sizing, but we skew a bit of more male to female. Performance running is barely more female to male. In case you see young people wearing our brands, a few of them are athletes and others identical to the fit, the style and the trend element. We’ve all the time had a giant tent from a brand perspective, which provides us good opportunity for growth.

WWD: How do sales break down between lifestyle and performance?

J.P.: Pure play lifestyle is certainly greater than performance, however it really relies on the market. Within the U.S., performance is a better percentage of our overall total revenue than it’s in China or Korea.

WWD: How is your enterprise in China, considering the situation over there right away?

J.P.: Now we have a giant presence over there and we’re growing in China, however it’s definitely been curtailed by the situation. While you’re shutting down major cities for days or perhaps weeks upon end, it definitely impacts retail in those districts.

WWD: Where do you see apparel moving into the longer term? Do you see it becoming a much bigger a part of the business?

J.P.: It’s a key a part of our growth over the following three to 5 years. And we’ve got a recent head of apparel, Julie Pike. We’re really attempting to get every thing to ensure that it to start acceleration in 2024. And again, with d-to-c being a vital a part of our overall business particularly markets, growth in apparel is imperative.

WWD: What number of stores do you use and where?

J.P.: We own 475 stores and there are one other 3,000 third-party stores. We own and operate stores within the U.S., throughout Western Europe, Japan, Hong Kong and the Pacific.

WWD: Is retail something you’re going to be rolling out or do you’re thinking that those numbers are going to stay regular?

J.P.: We predict it’s a vital a part of us getting closer to the patron. But we’re still going to be a wholesaler. We still have strong relationships with a number of the biggest retailers across the globe, in addition to a number of the smallest and most strategic retailers across the globe, specifically run specialty and lifestyle specialty stores. And we expect that can be a vital a part of our bringing our brand to consumers.

WWD: With a few of your competitors, their retail stores offer lots of bells and whistles. Is that something that you are feeling needed on your stores as well, or are they more product driven?

J.P.: You’ve to satisfy the patron where they need to shop, how they need to shop and once they need to shop. So everyone that’s coming into one in all your stores begins their journey, normally on their phone, on their way or at home. So it’s not only in regards to the in-store experience. It’s in regards to the whole consumer journey. Now we have a serious focus to attempt to understand that journey by category, since the journey for somebody coming in for a performance running product is different than for somebody who’s coming in searching for the most recent release. And so once they get to the shop — or post-purchase — you should be sure it’s a seamless experience.

WWD: Made within the USA has been a giant focus of Latest Balance. You simply announced you’ll be investing $65 million to expand your factory in Skowhegan, Maine. What number of factories do you might have?

J.P.: Now we have three in Maine, two in Massachusetts and one within the U.K. And we’re constructing a distribution center in Tennessee. We opened a second facility in Massachusetts earlier this yr. Domestic manufacturing can be about community. The communities where we own and operate these factories profit at numerous different levels, from the employment in fact, but in addition the giving and involvement that Latest Balance has for many years.

WWD: Did you profit from having all of those domestic plants when there was such a problem with supply chain world wide?

J.P.: We’ve had the factory in Lawrence, Massachusetts, since 1982. When all the opposite brands went overseas, Jim kept his U.S. factories. After all, that they had to shut in March of 2020 but a pair opened back up 10 days later making masks — anything we could do to assist the front line on the time. COVID[-19] threw wrenches into any type of steady-state production, including domestic manufacturing, so it had been a challenge, however it’s operating effectively right away.

WWD: Do you’re thinking that corporations have a greater responsibility in strengthening American cities post-pandemic?

J.P.: It’s all the time been a part of Latest Balance. We’ve had 4 global headquarters, all of them inside 1 / 4 mile of where the primary one began, just outside of Boston in Brighton. And domestic manufacturing is one other example of that. It’s all the time been a vital a part of who we’re, attempting to do good in communities where you reside and work.

Latest Balance recently opened The Track, a recent headquarters and research facility.

WWD: You lately opened The Track in your hometown of Boston, an enormous multisport facility and sports research lab. Why did you should invest that sort of energy right into a recent facility?

J.P.: It was a 10-year project that included the constructing of latest global headquarters. Round the corner to that was the constructing of a Bruins practice facility. After which next to that a Celtics practice facility. So each those teams practice in these buildings which can be right next to our global headquarters. Across the road, the track opened up this past April and that’s really an important example of community. The track season is 100 days long so the local colleges and high schools can be in there. And the opposite 250 days of the yr, it’s occupied by other activities, whether that’s indoor soccer, basketball or other things that communities are available and take part in. Also, inside there, there may be a 3,500-person music venue and a 17,000-square-foot [research and development] innovation center for all sports. That’s where our future goes to be created from a product standpoint. This was Jim’s vision of constructing a Latest Age headquarters and reenvisioning the realm.

WWD: Where do you see Latest Balance moving into the following five years?

J.P.: From a growth standpoint, we laid out a refreshed long-range plan in 2019 — unbeknownst that we’d be facing COVID[-19] a yr later — that we refreshed in the midst of 2020, to grow from $7 billion to $10 billion. We didn’t put a date on the $10 billion because we could grow rather a lot quicker if we desired to. But it surely’s not nearly total growth, it’s in regards to the quality of that growth. So we’ve got been spending the last three years really attempting to strengthen our distribution, introduce recent products which can be higher-end. And that has helped us achieve success. So from a growth standpoint, we imagine we are able to reach $10 billion over the following few years.

WWD: Tell us a bit of bit more about your management style. Did you might have a mentor?

J.P.: Well, I’ve worked with Jim Davis for 27 years — he’s been an important mentor. He’s an actual entrepreneur and an everlasting optimist. He understands tips on how to operate as a worldwide company and likewise the importance of being strong in your individual community. In order that’s had a giant influence on me. I believe there’s been lots of carnage with COVID[-19] however the silver lining is the way in which our team became action-oriented. I fundamentally imagine these 30-, 60-, 90-day sprints have been a key a part of us attempting to operate faster with agility to not only detect consumer trends, but react and respond with products and programs to deal with it.

WWD: Are there every other Davis members of the family in the corporate?

J.P.: Yes, Chris Davis, their son, is our chief marketing officer and he’s doing an important job. And Kassia Davis is president and CEO of PF Flyers and worked for Latest Balance for numerous years. She also has her own women’s brand [the sustainable fashion brand Kada] that she began from scratch that is totally separate from Latest Balance.

WWD: Latest Balance used to own PF Flyers until you sold it to Kassia. What other brands do you own?

J.P.: We also own Warrior, a lacrosse and hockey brand.

WWD: Are you exploring acquiring every other brands?

J.P.: There are all the time inquiries that come to us to accumulate corporations. But we imagine the chance we’ve got with the brand in front of us is important and exciting. And that’s where we’re focused.

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