Buffett bullish on LV furniture market

Jennifer Shubinski

Friday, June 20, 2003 | 11:08 a.m.

In a repeat performance of the 2001 opening of the R.C. Willey furniture and electronics store in Henderson, billionaire executive Warren Buffett on Thursday declared the company's new Summerlin store to be one of the chain's top performers after just five weeks of operation.

The success of the two stores indicates there is room in the Las Vegas area for a third R.C. Willey, Buffett said.

"I can tell you right now, the two Las Vegas stores, the Henderson store and the Summerlin store, are No. 1 and No. 2 in R.C. Willey. It's opened my eyes," Buffett said Thursday during an event marking the opening of the Summerlin location.

Buffett is chairman of Berkshire Hathaway, an Omaha, Neb., investment firm that acquired the Salt Lake-based furniture retailer eight years ago.

Chief Executive Scott Hymas said the Henderson store has about $95 million in sales a year, and the pace of sales at the Summerlin store, after a month, has had the two stores jockeying for the No. 1 position ever since.

Hymas said that one of the R.C. Willey stores in Utah is also very successful, and sometimes pushes the Las Vegas-area stores out of first place. Sales at stores that move less volume top about $35 million a year in sales, he said.

The Summerlin store is R.C. Willey's second in Nevada and 12th in three states.

The R.C. Willey in Summerlin, off Interstate 215 at the Town Center exit, is one of the company's largest stores, at 230,000 square feet.

Before a crowd of R.C. Willey executives and customers who stopped shopping to listen in, Buffett said there would be more R.C. Willey stores in the Las Vegas Valley, and nationwide.

"We will open more stores. Whether the next one we open is in Las Vegas or someplace else I'm not sure, but 10 years from now, we will have a number of new stores and there will be more than two stores in Las Vegas," he said. "I would not have predicted the volume down here."

Buffett said there was some worry that a second R.C. Willey store in Las Vegas would cannibalize sales from the existing Henderson location, but so far that hasn't been the case.

John Restrepo, principal of Las Vegas economic research firm Restrepo Consulting Group, said there are a number of furniture stores that serve the middle-to lower-income market in Las Vegas -- but the market isn't saturated with such stores.

"I don't see an issue of overbuilding at this point," he said.

The market for higher-end furniture in Las Vegas appears to have less competition.

"The higher-end market is still being underserved," Restrepo said. "You can see with the success of the Pottery Barn and William Sonoma, near the Rampart and Charleston area, and they seem to be doing pretty well."

Restrepo said many high-end furniture retailers are not convinced that there is a growing educated, affluent population in the Las Vegas area.

"Some are still hesitant about coming here," he said.

The high sales figures at their Las Vegas-area stores show there are people here willing and able to spend money, R.C. Willey executives said. They also point out that the strong sales are despite the fact that R.C. Willey isn't open on Sundays -- big shopping days in Nevada but not in Utah, where the Mormon church discourages commerce on Sundays.

Hymas said the day off for store employees allows them to spend time with their families and return refreshed for work.

Buffett said the six-day schedule for R.C. Willey hasn't mattered.

"It's not routine for everyone to succeed," he said. "It's the unusual ones that succeed."

Buffett also commented on the business sense of R.C. Willey Chairman William Child, son-in-law of company founder Rufus Call Willey.

"It takes a very successful operation and retailing I will tell you is hard work. That's part of the equation and it takes some great managers," Buffett said. "Bill Child took this company from $250,000 to over $500 million this year."