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Berkshire Hathaway Inc. : Bill Child built a company that Warren Buffett wanted to buy

01/14/2014 | 11:06am US/Eastern
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Just like many of Utah's successful businesses, R.C. Willey Home Furnishings started as a part-time sideline. Rufus Call Willey, a lineman for Utah Power, began selling Hotpoint brand appliances door-to-door in 1932 in rural Syracuse, a tiny town in Davis County.

To get people using refrigerators or electric ranges when electricity was brand-new to the area, he would let them try out the appliances for a week. When his neighbors compared the new appliances to their iceboxes and wood-burning cook stoves, very few had Willey take them back. He made the proposition especially attractive by offering to take payments over the next three years, payable at harvest time.

In 1950, Willey built his first tiny store next door to his house in Syracuse, having operated out of the back of his little red pickup truck until then. When he died unexpectedly in 1954, son-in-law Bill Child, recently graduated from college with a degree in education, was asked to take over the business. Based on a loyal customer base and a good reputation, Child said, "OK. There Child was, with a wife and family to support, including his mother-in-law. Loans were called in and taxes came due and Child had a choice - make the business work or fold. "I had no choice and there was no way to go back," Child said. "If we'd gone back to start with, we would have been owing people money."

The original 600-square-foot store was expanded and furniture was added to the product mix. In 1969 the company built its second store in Murray. West Valley City got a store in 1986. Both of these would be expanded repeatedly as the business grew. By then the company had introduced its signature hot dog giveaway to increase traffic.

By 1995, R.C. Willey's now-seven furniture stores were claiming annual sales of about $300 million, and the company had 1,300 employees. The company had attracted the attention of Berkshire Hathaway Inc., the holding company led by billionaire investment guru Warren Buffett. Buffett acquired R.C. Willey on May 24, 1995.

With the backing of Berkshire Hathaway, R.C. Willey continued to build. Its Intermountain Distribution Center, erected next to Salt Lake International Airport in 1997, was the largest of its kind in the United States at 860,000 square feet. It cost $30 million and replaced three existing warehouses.

R.C. Willey expanded outside Utah for the first time in August 1999, when it opened a store in Meridian, Idaho (near Boise). It instantly claimed the leading spot in that market. A 162,500-square-foot store was soon opened in Henderson, Nev. Despite the out-of-state expansion. Child insisted on the maintaining the ,company's policy of closing stores on Sundays. By early 2000, the company's credit operations topped $185 million in outstanding loans to furniture and appliance buyers. In 2005, the credit operation was absorbed into a newly created industrial bank backed by Berkshire Hathaway.

Chief financial officer Scott L. Hymas, who had been with the company since 1987, succeeded Bill Child as CEO in February 2001. Child remained chairman. At the same time, Bill Child's nephew, Jeffrey S. Child, became the company's president.

Today, RC Willey is still family-operated, and has eight stores located in Utah, Idaho, Nevada and California. A new supersized store is under construction in Draper.

Bill Child, still chairman of R.C. Willey, is back from a two-year Mormon church mission in Washington, D.C., and has resumed an active role in the company. When asked the secrets to the R.C. Willey success story, he offered, "Be patient. Don't expect miracles to happen without a lot of hard work, mentally and physically."

Asked if retailers in trouble today would be able to dig out the same way he did and ultimately be successful, Child said, "I think so. If you apply proper principles, I think there are plenty of opportunities. Even in these tough times, the American dream is not dead."

(c) 2013 Enterprise Business Newspaper Inc.

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