New Balance CEO details the 'next big revolution' in sneakers

New Balance is racing to bring the next innovative sneaker to consumers across categories, from street fashion to professional athletics.

Steering the Boston-based company is a native son of the city, Joe Preston, who sees the privately held athletic sportswear brand breaking out of its "dad shoe" reputation by delivering products that are new, fresh, and authentic.

“We do believe the next big revolution is going to come in materials," the New Balance CEO told Yahoo Finance in a new episode of Lead This Way. "I fundamentally believe that, and I think it’ll come plant-based or something that will revolutionize the industry."

Preston may not be a molecular biophysicist by trade, but he knows it takes scientific research to develop the best footwear.

In the company's research lab in Brighton, Mass., a robot pounds away at the latest test sample of a New Balance running shoe. Across the hall is a test room that features a dual-banded treadmill and over 20 wall-mounted motion sensor cameras to study prototypes.

Joe and his team test how their shoes stand up against machine-simulated wear and tear. Then, they further evaluate the product in performance tests with real athletes.

But the journey to patenting innovation doesn’t come without challenges from competitors. Last year, industry titan Nike (NKE) sued New Balance and Skechers (SKX), citing patent infringement of its Flyknit technology.

"Intellectual property is a key element of a company’s assets, so we want to protect our assets," Preston said about the lawsuit. "Likewise, if we feel companies are overstepping their bounds when they come after us, then we’re going to defend ourselves."

Preston's leadership style: 'Enable and facilitate'

Preston is a first-generation American running a business that touches every corner of the world.

"My parents immigrated here in 1959," Preston said. "I'm one of five children, and hard work, education were really drilled into me early on."

Preston started his career as a senior product manager at New Balance in 1995. In 2018, after 23 years at the company, he was promoted to president and CEO of the company.

The CEO credits part of his leadership style to the time he spent managing the brand overseas. In 2024, New Balance celebrated 35 years in Japan, and Preston personally made the trip for the occasion.

“I ran our international business for a long time, and that's where I learned that the role of a leader is to enable and facilitate, not audit and control," he said.

The leader of the global athletic wear brand has leaned on the international acuity he attained during his tenure to spur New Balance's next leg of growth. The sneaker maker reported $6.5 billion in annual sales in 2023. About a third of those sales were in the US, and two-thirds were from outside the US, according to Preston.

“Everyone wants to be a global brand," Preston said. "The top sellers are the top sellers everywhere, but that doesn’t mean everyone is getting the information the same way, so you’ve got to make sure those nuances are in place so that you can benefit.”

Preston anticipates New Balance will reach $10 billion in sales in the next few years, with a roadmap for that target coming later this year.

Retro sneakers with new tricks

There's plenty of momentum behind the brand post-pandemic, as sneaker manufacturers witnessed a perfect storm of consumers looking to shop combined with a rush toward retro sneakers.

New Balance's 23% revenue growth between 2022 and 2023 outpaced that of Nike, Asics, and Puma. This all comes as the global sneaker market continues to grow and is projected to top $80 billion this year.

“If you go back into our archives, ... you understand that these products that were introduced were state of the art,” Preston said about the retro shoe trend. “The 990 [released in 1982] was the first $100 running shoe, and there are multiple models in there that were worn by some of the best runners in the world."

"That’s a discovery item," he added, "and I think our designers do a great job of developing new product, and then taking some of our old classics and reimagining them. And the consumer is really gravitating toward it.”

According to data from online marketplace StockX, New Balance owned five of the top 16 retro and running silhouettes shoppers were obsessed with in 2023.

And as if organic interest wasn’t enough, an unexpected flash point for the brand occurred after pop icon Taylor Swift was seen sporting New Balance shoes to an NFL regular season game to support her beau Travis Kelce.

It also helps to have modern partnerships with world-renowned athletes. New Balance has struck sponsorships with tennis phenom Coco Gauff, fresh off a US Open Tennis win; Olympic gold medalist sprinter Sydney McLaughlin, who is ramping up for the 2024 Paris games; and baseball superstar Shohei Ohtani, who landed the largest contract in MLB history.

From the perspective of the New Balance CEO, it’s all proven beneficial in attaining new, youthful buyers.

“I definitely think it's helped us get the brand younger,” Preston said. “I think you want to find athletes that you believe share the same values that you have as an organization.”

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