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Thursday, May 26, 2022

From Dairy Queen to Brooks Running, Berkshire Hathaway's companies seeing an influence from inflation

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Inflation has been one of many sizzling subjects for markets this yr, and rising costs are impacting portfolio firms for Berkshire Hathaway in several methods.

In March, the Federal Reserve’s most popular inflation gauge rose 5.2%, and the central financial institution is beginning to elevate rates of interest, attempting to string the needle between slowing the rise in costs and avoiding a recession.

Ahead of the Berkshire annual shareholders assembly, executives from a number of of the conglomerate’s firms advised CNBC how inflation is hitting their companies.

Irv Blumkin, the CEO and chairman of Nebraska Furniture Mart, stated that the upper costs have been beginning to chip away on the fundamentals of his enterprise however issues are in good condition total. Home furnishings was a growth trade throughout the pandemic, as Americans caught at house redesigned their residing areas and adjusted to distant work.

“Inflation impacting our business a little bit, and we can see a little slowdown in written business, but it’s coming off such huge numbers from the pandemic. … It’s still at a high level, but you can definitely see a slowdown,” Blumkin stated.

Jim Weber, CEO of Brooks Running, stated it was robust to lift costs however that he thinks a few of the price pressures would cool quickly.

“We don’t have unlimited pricing power, but have taken selective price increases where we think we can. But our whole industry is so competitive. It’s a big market place. … I do believe in the supply chain that costs are going to mediate a bit,” Weber stated.

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Related to inflation, Dairy Queen CEO Troy Bader highlighted the tight labor market specifically as a problem for the restaurant trade.

“It’s the biggest challenge that our franchisees face, and I would say it impacts us in three different fronts: one is our franchisees,” he stated. “The other really are our vendors and our distributors.”

Roughly 20% of Dairy Queen’s franchise areas nonetheless have closed eating rooms due to staffing points, Bader stated.

“It’s not about wages today. People are paying whatever they need to pay. There just aren’t enough people to really come and work in the industry,” Bader stated.

Check out all the CNBC Berkshire Hathaway annual assembly protection right here.


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