Buffett Says Low Cost Structure of Borsheims Helps Beat Other Chains

Warren Buffett, CEO of Berkshire Hathaway, urged his investors to purchase from Borsheims, a jewelry store owned by the company. He claims that the cost structure of the jeweler based out of Omaha, Nebraska beats the competition.

“I’ve looked at the figures for all publicly owned jewelry companies, and the contrast with Borsheims is startling,” said Buffett in a shareholder message that also pitched auto insurance provider Geico. “Our one store operation, with its huge volume, enables us to operate with costs that are fully 15 – 20 percentage points below those incurred by our competitors. We pass the benefits of this low-cost structure along to our customers.” He did not even mention if this includes two other jewelry chains owned by the company: Ben Bridge and Helzberg Diamonds.

He also mentioned that Borsheims is planning to expand the business beyond Omaha, Nebraska.

“Every year Borsheims sends out thousands of selections to customers who want a long-distance opportunity to inspect what it offers and decide which, if any, item they’d like to purchase,” said Buffett. “We do a huge amount of business in this low-key way.”

During the third quarter, Berkshire Hathaway said that the retail operations revenue, including kitchen retailers, toy, furniture and jewelry companies, went up by 5% to $48 million over the same quarter in 2013.

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