Finance History | Star Furniture, 1 July 1997 — Berkshire Added a Major Texas Home-Furnishings Retailer

On 1 July 1997, Berkshire Hathaway acquired Star Furniture, a Houston-based home-furnishings retailer with stores in Houston and other Texas cities. The company joined a Berkshire retail group that already included Nebraska Furniture Mart and R.C. Willey, but it continued to operate under its own name and management. Star's contribution appeared quickly in Berkshire's consolidated accounts because the acquisition added six months of the retailer's activity to the 1997 reporting period. Home-furnishings revenue increased by US$80.5 million in 1997 dollars, or 13.7 percent, from the prior year, and Berkshire attributed about three-quarters of that increase to Star. Operating profit for the group reached US$53.7 million in 1997 dollars, an increase of US$12.7 million, or 31 percent, with Star accounting for almost half of the gain. The following year, more than half of the group's US$126 million revenue increase in 1998 dollars resulted from including Star for a full year rather than only half of 1997. Those comparisons show why acquisition timing matters when reading consolidated financial statements, since reported growth can reflect an added business as well as expansion at existing stores. The economic test was whether Star could continue producing attractive returns after the accounting comparison moved beyond its first full year inside Berkshire. Furniture retailing required large inventories, delivery capability and substantial selling space, while demand remained exposed to housing activity, consumer confidence and credit conditions. Berkshire avoided merging Star into another furniture subsidiary, preserving local purchasing knowledge and management accountability in the Texas market. The historical photograph at 802 Milam Street records Star's Houston operating presence decades before the acquisition and does not identify the room where the 1997 transaction was negotiated or closed. As a public-site anchor, the former premises connect Berkshire's financial reports to the retailer whose partial-year inclusion materially changed the home-furnishings segment's 1997 revenue and operating profit. Photo: Star Furniture company archives, CC BY 3.0, via Wikimedia Commons.