Nebraska Furniture Mart
Company Overview
Nebraska Furniture Mart is the largest home furnishings store in North America, founded in Omaha in 1937 by Rose Blumkin — 'Mrs. B' — with $500 borrowed from her brother. The single Omaha store generates more revenue than most furniture retailers' entire national chains. Mrs. B's philosophy — 'sell cheap and tell the truth' — remains the operating model 90 years after founding.
Investment Story
1983: The handshake deal. Berkshire acquired 80% of Nebraska Furniture Mart from Mrs. B — then 89 years old — for $55 million. The deal required no financial audit, no formal due diligence, and no law firm involvement. The conversation lasted a few hours; the handshake completed it. Buffett has said he trusted Mrs. B's word more than any audited financial statement.
The business at acquisition. NFM's Omaha store occupied roughly 200,000 square feet and generated revenues that dwarfed any comparable single-store furniture retailer. The model: buy furniture in large volumes at manufacturer's lowest prices, sell at the smallest reasonable margins, provide exceptional selection, and tell the truth to customers. The combination of selection, price, and integrity had made NFM unstoppable in the Omaha market.
1989: Mrs. B's temporary departure. Mrs. B, then 95, had a dispute with family management about carpet operations and resigned — then opened a competing store directly across the street from NFM. She sold carpets at prices NFM couldn't match because she had no overhead. Berkshire eventually bought her out and reunited her with NFM. She worked until she was 103.
2003: Kansas City expansion. NFM opened its second store in Kansas City, Missouri — a 450,000 square foot mega-store that became the largest furniture store in the world. The Kansas City model replicated the Omaha model at larger scale, rapidly dominating that market.
Scale economics. By 2022, NFM operated three enormous stores (Omaha, Kansas City, and Dallas) generating several billion dollars annually in combined revenue — remarkable for a single-concept, family-managed company maintaining the original values of Mrs. B's $500 founding investment.
Buffett's Own Words
Chips Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040, or to Mrs. Bette Deckard for Wesco Financial Corporation, 315 East Colorado Boulevard, Pasadena, California 91109. Textiles Earnings of $1.3 million in 1978, while much improved from 1977, still represent a low return on the $17 million of capital employed in this business. Textile plant and equipment are on the books for a very small fraction of what it would cost to replace such equipment today. And, despite the age of the equipment, m
Chip Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040, or to Mrs. Bette Deckard for Wesco Financial Corporation, 315 East Colorado Boulevard, Pasadena, California 91109. Textiles and Retailing The relative significance of these two areas has diminished somewhat over the years as our insurance business has grown dramatically in size and earnings. Ben Rosner, at Associated Retail Stores, continues to pull rabbits out of the hat - big rabbits from a small hat. Year after year, he produces very l
Chip Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040, or to Mrs. Bette Deckard for Wesco Financial Corporation, 315 East Colorado Boulevard, Pasadena, California 91109. As indicated earlier, undistributed earnings in companies we do not control are now fully as important as the reported operating earnings detailed in the preceding table. The distributed portion, of course, finds its way into the table primarily through the net investment income section of Insurance Group earnings. We sho
*Nebraska Furniture Mart and our association with Rose Blumkin and her family. Nebraska Furniture Mart Last year, in discussing how managers with bright, but adrenalin-soaked minds scramble after foolish acquisitions, I quoted Pascal: “It has struck me that all the misfortunes of men spring from the single cause that they are unable to stay quietly in one room.” Even Pascal would have left the room for Mrs. Blumkin. About 67 years ago Mrs. Blumkin, then 23, talked her way past a border guard to leave *
Nebraska Furniture Mart(1) 14,511 3,812 11,609 3,049 5,917 1,521 See’s Candies ............. 26,644 27,411 26,644 24,526 13,380 12,212 Associated Retail Stores .. (1,072) 697 (1,072) 697 (579) 355 Blue Chip Stamps(2) (1,843) (1,422) (1,843) (1,876) (899) (353) Mutual Savings and Loan ... 1,456 (798) 1,166 (467) 3,151 1,917 Precision Steel ........... 4,092 3,241 3,278 2,102 1,6
Investment Lessons
Simple competitive advantages, maintained with fanaticism, are durable. Mrs. B's model — buy cheap, sell cheap, tell the truth — is not sophisticated. Competitors have tried to copy it and failed, because the model requires operational fanaticism that most companies can't sustain. The willingness to price furniture at razor-thin margins, serve every customer with integrity, and operate with extreme cost discipline requires a cultural commitment that external management cannot replicate for long.
Owner-operator acquisition at its best. The NFM acquisition is Buffett's template for the ideal Berkshire purchase: owner who built the business, who has operated it their entire life, who cares deeply about its continuation, and who wants a buyer committed to preserving what was built. The $55 million price and handshake deal reflected mutual trust between buyer and seller that made traditional M&A processes unnecessary.
The second store test of model durability. Many retail formulas succeed in one location but fail to replicate. NFM's Kansas City store — generating revenues comparable to the Omaha store within a few years of opening — validated that the model was genuinely scalable, not just locally entrenched. This validation more than justified the original acquisition price.