A small chain of furniture stores based in the Midwest is outselling the rest of the industry, according to billionaire investor Warren Buffet.
Nebraska Furniture Mart has just four locations: Omaha, Nebraska; Kansas City, Kansas; Clive, Iowa; and Dallas, Texas.
The Omaha location is “the highest-volume home furnishings store in the United States except for our new Dallas store,” Buffet wrote in his most recent annual letter to shareholders.
He said that the Omaha store raked in more than $44 million in a single week last year when it was running a promotion tied to Berkshire Hathaway’s annual meeting with investors.
“If you repeat that figure to a retailer, he is not going to believe you,” Buffet wrote.
The Omaha store typically generates about $9 million in sales weekly, according to his letter.
Buffet didn’t provide any revenue details on the Dallas store, which has been open for only a year. On its website, Nebraska Furniture Mart projects about $600 million in sales annually for that location.
By comparison Costco, one of the highest-grossing retailers in the US, generated $113.67 billion in sales in fiscal 2015 with 686 warehouses — which calculates to about $165 million in sales per warehouse.
So how does Nebraska Furniture Mart generate so much revenue per store?
While it only has four locations, each store and accompanying distribution center is massive, boasting more than 1 million square feet. Walmart supercenters, by contrast, are about 180,000 square feet and Costco warehouses are about 143,000 square feet.
Nebraska Furniture Mart’s Dallas store, for example, has 560,000 square feet of retail space attached to a 1.3-million-square-foot warehouse.
The store offers hundreds of different kinds of couches, accent chairs, rugs, dining tables, mattresses, and other furniture, as well as kitchen appliances and laundry machines.
It also has a “man cave” area featuring pool tables and game tables and an electronics department featuring flat-screen televisions, smartphones, and game consoles.
Employees in the store’s design studio will help customers put a room of furniture together or select countertops, flooring, and backsplashes, which the store also sells, according to The Dallas Morning News.
The store also has an aggressive pricing policy.
It will match other retailers’ prices and offer an additional 10% off if shoppers find a cheaper price.
The company stays competitive with online retailers by using electronic price tags, which allow Nebraska Furniture Mart to swiftly react to promotions offered by competitors, such as Amazon, Best Buy, Home Depot, and Walmart.
Nebraska Furniture Mart was founded in Omaha, Nebraska in 1937 by Russian immigrant Rose Blumkin, who worked at the company until her death in 1998 at age 104.
Buffet acquired 90% of the business for $60 million in 1983. Here’s what the company says on its website about the acquisition:
“Investor Warren Buffett and [Blumkin] used a simple handshake to seal the purchase of 90% of the business for Buffett’s Berkshire Hathaway portfolio in 1983. The ‘Historic Omaha Handshake’ plus a simple two-page written agreement were all that were required — no audit of the store’s books, no inventory of its merchandise.”
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