For New Balance Athletics Inc. president and CEO Joe Preston, brand evolution should come naturally.
At the FN CEO Summit in Miami on Thursday, Preston told FN senior news and features editor of athletic and outdoor Peter Verry that over the 28 years he has been with New Balance, the company has continued to evolve.
“We’re not trying to be something we are not,” Preston said. “As we have expanded into other sports, it’s been a natural evolution for us. And we’ve done it in a way that has been systematic, making sure that as we enter into a segment that we’re serious about [it] and have the fortitude to stay in it.”
But that’s not to say the company has not experienced any speed bumps along the way. The executive went on to describe how New Balance lost its momentum and adapted a new strategy. “We came up with the mantra of ‘controlling our destiny’ and doing everything we can to meet the customer where they want to be met.” Preston said.
While implementing this mantra, Preston said he had 60 one-on-one conversations with people across the company and met with an additional 250 employees in groups of three or four, just to listen to them and learn what they felt the company needed to do to control its destiny.
“We changed the way we operated throughout the pandemic,” Preston admitted. “We adapted to an agile work methodology, which is predominantly in the tech sector, and we brought it into our global leadership team that allowed us to run these sprints with small teams that had the autonomy, the authority and the accountability to develop action plans against a set of initiatives. And that allowed us to accelerate our agenda and accelerate the brand growth.”
Brand growth has also been made through investing in direct-to-consumer and international expansion. According to Preston, New Balance opted to open its own stores when it decided to do business abroad. “As we looked to expand internationally, there weren’t many retailers like Foot Locker or Dick’s Sporting Goods, so we had no choice to build our own stores,” the CEO said. “Doing this made us a better retailer because we’re operating stores, we’re managing them. It’s also helped us develop our apparel business, which today is over 20% of our overall revenue.”
Back at home, New Balance has made a significant effort to invest in Made in the USA product. In 2022, the athletic giant revealed “The Track,” a massive multisport facility located across from its headquarters in the Boston Landing mixed-use development. Highlights of the roughly 420,000-square-foot LEED Silver-certified facility include its 19,000-square-foot Sports Research Lab, the 50,000-square-foot Roadrunner music venue and a dual-terrain indoor track with hydraulically banked turns and six oval lanes that are 42 inches wide.
But that’s not the only new addition to New Balance’s local operations. A month earlier, the company opened an 80,000-square-foot athletic footwear factory in nearby Methuen, Mass. The factory, which cost $20 million to renovate, employs more than 90 people and began production in January on the Made 990v5 shoe.
Asked why these efforts have been made, Preston said that while the company has had factories in the U.S. for decades, the pandemic made it clear why local production is important.
“Onshoring has been a popular subject since the pandemic,” Preston said. “We all learned during the pandemic that if we’re not making stuff here in the country, then we’re pretty vulnerable.”
“A lot of that is just a commitment to the community,” the CEO admitted. “Obviously you’re providing jobs for people in the community. We also think that it’s beneficial for the environment. My only call out to the industry, as we begin to try to find ways to reduce tariffs or anything like that, let’s make sure that made in the USA efforts are not being penalized as a result of that.”
The 2023 FN CEO Summit is sponsored by Aetrex Inc., MakerSights, NuOrder by Lightspeed and Skypad.
