Power Players

Warren Buffett's model for aspiring business managers — a retail legend known as 'Mrs. B'

Rose Blumkin was a retail legend — but she was probably more famous as the entrepreneur who billionaire investor Warren Buffett still likes to refer to as a model for aspiring business managers everywhere to follow.

The Berkshire Hathaway chief recalls the late Blumkin as a "marvelous, marvelous woman." She was born on Dec. 3, 1893, in a Russian village near Minsk and immigrated to America when she was in her 20s.

"She couldn't speak a word of English" when she arrived in Omaha, Buffett told CNBC's Becky Quick this week. But Blumkin took a modest investment "and turned it into the largest home furnishings store" in the country, he added.

Blumkin, known as "Mrs. B.," was in her mid-40s when started Nebraska Furniture Mart in the basement of her husband's shop in downtown Omaha in 1937 with $500.

Over the next four-plus decades, she turned NFM into a juggernaut that drew Buffett's attention. In 1983, he bought Blumkin's store in a $60 million deal that made it part of Berkshire Hathaway.

Courtesy Berkshire Hathaway

Buffett said the transaction was sealed with a simple handshake. "We did not get an audit. We did not look at the property records. I just said, 'Mrs. B. do you owe any money' and she says 'no' and that was it."

"I felt like I had the Bank of England on the other side," the 88-year-old "Oracle of Omaha" said in testament to her hard-driving nature.

After selling to Berkshire, Blumkin continued to work at NFM. But, according to her obituary in The New York Times, she left six years later when she was 95 because she felt frozen out as her grandchildren became more involved in the business. She then started a rival store, Mrs. B.'s Clearance and Factory Outlet, across the street from the Furniture Mart, the Times reported. The family rift was later mended and Berkshire bought the Outlet in 1992, the paper said, adding Buffett later joked that it had been a mistake to let Blumkin leave without signing a noncompete agreement.

Blumkin retired from NFM when she was 103. "That's sort of a yardstick we use now on retirement," Buffett quipped. She died in 1998 at age 104.

'Absorb Mrs. B's lessons'

Buffett has referred to Blumkin throughout the years as someone others should try to emulate.

In a letter to Berkshire shareholders in 2013, Buffett wrote, "Aspiring business managers should look hard at the plain, but rare, attributes that produced Mrs. B.'s incredible success. Students from 40 universities visit me every year, and I have them start the day with a visit to NFM. If they absorb Mrs. B.'s lessons, they need none from me."

Blumkin "never went to school a day in her life," Buffett said with awe on CNBC's "Squawk Box" this week. "[And] when the family sat down for dinner, they sang 'God Bless America' before eating. It's an incredible story."

"Students from 40 universities visit me every year. ... If they absorb Mrs. B.'s lessons, they need none from me." -Warren Buffett, 2013 letter to Berkshire shareholders

According to the Times, shortly after the acquisition, Buffett said in 1984: ''Put her up against the top graduates of the top business schools or chief executives of the Fortune 500 and, assuming an even start with the same resources, she'd run rings around them."

That's high praise from the world's third-richest man, with a net worth of $83.1 billion, according to Forbes.

Nebraska Furniture Mart is a part of Berkshire Hathaway's larger retail portfolio. While Berkshire does not separate out the performance of specific businesses, its retailing group saw revenues of $15.6 billion in 2018, a 3.6 percent increase from 2017.

NFM now operates its business from three large retail complexes in Omaha, Kansas City, Kansas, and a suburb of Dallas — totaling about 1.5 million square feet of retail space. The company also owns Des Moines, Iowa-based Homemakers Furniture, a chain with about 215,000 square feet of retail space and 4,633 employees at multiple locations, according to Berkshire's 2018 annual report.