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I started telling the Borsheims of Omaha story last week. Today I’ll describe how it grew to be a company with such a strong franchise that it attracted Warren Buffett, who bought 80% of the shares in 1989.
The first store was set up by Louis Borsheim in the frontier days of this Union Pacific railway town in 1870 and was held by his family until 1947 when the small jewelry shop was bought by husband and wife Louis and Rebecca Friedman and their son, Ike.
Rebecca has a link to another investment story I’ve related. She is one of the younger sisters of Mrs Rose Blumkin of Nebraska Furniture Mart fame (bought by Berkshire in 1983). Mrs B spent years working hard and saving enough money to help one sibling at a time out escape oppressive Soviet Belarus.
Rebecca and Louis used the money sent from Omaha to make their way to America via Latvia in 1922, a journey fraught with danger. They arrived in the USA with no assets to speak of, but through shear hard work, intelligence and decency accumulated enough capital over a quarter of a century to buy Borsheims.
Friedman’s store was run with the same philosophy as Nebraska Furniture Mart:
- A single-location offering customers a wide range;
- sell cheap and tell the truth;
- the low prices obtained from suppliers (due to large volume) and the benefits of a low expense ratio are passed on to customers leading to rapid turnover, and;
- a family dedicated to get every detail right.
Warren Buffett said that he had been remiss in not spotting the business as a potential acquisition soon after buying NFM in 1983, “Your chairman blundered….neglecting to ask Mrs. B a question any schoolboy would have thought of: “Are there any more at home like you?” (Buffett’s 1988 Letter to BH shareholders).
In 1986 Borsheims moved from the 7,000 sqft (35 staff) downtown store to its current location 120 Regency Parkway, off Omaha’s Dodge Street, 8 miles from the heart of the town. This offered much more (and cheaper) space for growth and plenty of parking; in moving, it more than trebled its floorspace in 1986, and has doubled again s
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