Rose Blumkin came to America penniless, spoke no English, and built a retail empire that Warren Buffett paid millions for. Then she stormed off and Buffett learned what happens when you forget to lock a caption.
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Warren Buffett has a favorite test for valuing a business, and he explained it in the Berkshire Hathaway (NYSE:BRK-A | BRK-A Price Prediction) (NYSE:BRK-B) 1983 Letter to Shareholders, dated March 14, 1984: “A question I always ask myself when evaluating a company is how I would, assuming I have sufficient capital and qualified personnel, like to compete with it. I would rather fight grizzly bears than compete with Mrs. B and her offspring.” Berkshire had completed the purchase of the Nebraska Furniture Mart in 1983, and the profit chart in the letter only shows the store from October to December. Five years later, Rose Blumkin carried out this test herself.
From second-hand clothing to a retail giant
Warren Buffett wrote that about 67 years earlier, Ms. Blumkin, then 23, “spoke in front of a border guard about leaving Russia for America.” She “had no formal education, not even at the high school level, and did not know English.” Warren Buffett said that after years of selling used clothing, she saved $500 in 1937 to open a furniture store. At the time of the letter, Warren Buffett writes, the Nebraska Furniture Mart was generating more than $100 million in annual sales from a single store.
Her reductions led to her being taken to court over fair trade prices. Buffett’s account of the verdict: “After demonstrating to the court that she could profitably sell carpet at a deep discount to the going price, she sold the judge $1,400 worth of carpet. »
Berkshire buys while Mrs. B continues to sell
Warren Buffett wrote in 1983 that Berkshire purchased 90% of the company, leaving 10% for family members involved in management. His 1992 letter states that the family sold 80% of its sales in 1983, so the two letters give different numbers. Warren Buffett added that Ms. B, “now 90 years old,” “remains president and is on the sales floor seven days a week.”
She continued. In the 1986 letter, Warren Buffett wrote that Ms. B “continues, at 93, to outsmart and outsmart every manager I have ever seen.” He added: “Competing with her represents a triumph of courage over judgment. » Mrs. B quickly tested this line herself.
Dispute over rugs sends Mrs. B next door
Buffett’s 1989 letter, dated March 2, 1990, reported that Mrs. B had resigned in May after a disagreement with the family over the rug department. Buffett wrote: “At age 96, she started a new business selling (what else?) rugs and furniture. » He also wrote: “Ms. B has probably made smarter business decisions than any American alive.” »
Wikipedia, citing the New York Times, reports that she came out of retirement after three months to open Mrs. B’s warehouse directly across the street, and that it became profitable in 1991. Buffett’s 1992 letter places it next door, in a building he owned. Accounts differ on the exact position. Regardless, she had never signed a non-compete.
How Berkshire brought it back in 1992
Buffett’s 1992 letter, dated March 1, 1993, states that in late 1992, Mrs. B decided to sell her building and land to Nebraska Furniture Mart, which opened a store alongside her in that building. “I’m thrilled that Mrs. B has reconnected with us again,” he wrote. The buyer was Berkshire’s Nebraska Furniture Mart, and the deal covered its building and land, as well as a non-competition clause that she “graciously offered to sign.”
Owner-operated businesses continue to drive Berkshire’s bottom line
The division that houses the Nebraska Furniture Mart remains a source of profit. In the second quarter of 2026, operating profits in the manufacturing, services and retail sectors increased to $4.47 billion, from $3.60 billion a year earlier, while total operating profit increased to $12.98 billion from $11.16 billion, according to Berkshire’s August 8-K filing. Greg Abel now leads the company as CEO. Class B shares have gained 14.18% year to date and trade at a P/E of around 12. Investors watching the third quarter earnings report should watch to see if the momentum in this segment continues.
A founder Buffett never wanted to face
Buffett’s 1992 letter closed the story with his own comment: “Ms. B belongs in the Guinness Book of World Records in many ways. Signing a noncompete at age 99 just adds one more.” According to J. Weekly, Rose Blumkin died in 1998 at the age of 104. She was the immigrant who started with savings selling used clothes, sold more than every manager Buffett knew, and was the only competitor he ever told that she would rather wrestle than wrestle grizzly bears.
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