Tags: retail | investments | blemish | Buffett

WSJ: Retail Investments Represent Blemish on Buffett's Record

By Dan Weil   |   Thursday, 17 Jul 2014 01:48 PM

Warren Buffett, CEO of Berkshire Hathaway, has succeeded with his investments in almost every sector he's entered.

But retail constitutes an exception. Buffett has called his performance in that area "awful," "pretty bad" and "really bad," The Wall Street Journal reports.

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It's not significant, given that Berkshire's nine retail businesses make up only 2 percent of its $182 billion in revenue, according to the paper's calculations. Those businesses include See's Candies, Ben Bridge Jeweler and Nebraska Furniture Mart.

Buffett and his partner Charlie Munger have admitted that their businesses haven't adapted to the ways in which the Internet has changed retailing. Consumers are increasingly shunning brick and mortar stores to do their shopping online.

But Buffett's retail woes far pre-date the Internet. He has called Berkshire's 1966 purchase of Baltimore department store Hochschild Kohn one of its biggest mistakes.

Frequently-changing shopping habits and sales channels make things difficult for retailers, Buffett has said, according to The Journal.

As for Berkshire overall, Morningstar analyst Greggory Warren is impressed with the company, but has some questions about its future.

"While Berkshire is likely to continue putting money to work in value-creating projects in the near-to-medium term, much as it has in the past, we think the huge sums of cash that it generates and maintains on its balance sheet will ultimately limit its ability to produce outsize returns," he writes on Morningstar.com.

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