Associated Retail Stores, Inc.
1. Origin of Relationship
Associated Retail Stores, Inc. (Associated) was founded in Chicago on March 7, 1931, by Ben Rosner and Leo Simon. In 1967, it was purchased by Diversified Retailing Company, Inc. for cash. Following the merger of Diversified into Berkshire Hathaway on December 30, 1978, Associated became a wholly-owned subsidiary of Berkshire.
2. Major Milestones
| Year | Event |
|---|---|
| 1931 | Founded in Chicago with one store and $3,200 in capital. |
| 1967 | Acquired by Diversified Retailing; Ben Rosner remains as President. |
| 1978 | Merged into Berkshire Hathaway, operating approximately 75 women's apparel stores. |
| 1979 | Contributes steady operating earnings despite intense industry headwinds and adverse demographics. |
3. Strategic Importance
Associated Retail Stores, Inc. served as an early case study in Berkshire's retail operations. Despite facing unfavorable industry trends and demographics (popular-priced women's apparel in urban areas), the company generated excellent returns on capital—frequently reaching 20% after tax. This performance was driven entirely by the cost-containment skills and merchandising talent of Ben Rosner. Associated demonstrated that a structurally average or declining business could still be a highly profitable cash generator if managed by a disciplined owner-operator who resisted wasteful growth and focused on capital efficiency.
🔗 Connections
- Parent / Manager: Berkshire Hathaway Inc., Ben Rosner
- Concepts: Owner-Operator Mentality, Capital Allocation
- Sources: 1978 Letter, 1979 Letter