Buffett's lieutenants see economy picking up
OMAHA (Reuters) - All signs point to slow but steady economic growth as consumers gradually increase their spending, senior executives of Warren Buffett's conglomerate Berkshire Hathaway said on Friday.
Nearly 40,000 Berkshire (BRKa.N) shareholders are gathering in Omaha this weekend for the company's annual meeting. While a good bit of Saturday's Q-and-A is expected to focus on Buffett's health and succession planning, the "Oracle of Omaha" will inevitably field a number of questions on the economy.
Two of his most consumer-oriented businesses, the confectioner See's Candy and the furniture rental business Cort, have seen something of a turn for the better.
"It's basically more of what we've seen the last couple of years, slow growth," See's Chief Executive Brad Kinstler said in an interview. "The consumer continues to spend just a little more than a year ago."
See's, which expects to grow store count by about 5 percent this year with an expansion in the Midwestern United States, is also expecting sales to grow around 5 percent this year, as mall traffic increases slightly.
Jeff Pederson, the president of Cort, said his company was also seeing things loosen up.
"Businesses are starting to use some of their capital," Pederson said, adding Cort was also having success in the niche of furniture rental to college students. "That part of our business has been very vibrant the last two years."
Their comments seem to echo the sentiment of their boss, who has been cautiously bullish of late.
"We're still seeing an economy that's improving, but it's not at a fast rate," Buffett told CNBC in comments aired Friday morning.
Buffett has said the biggest problem in the market is housing inventory -- new families need places to live, and as empty homes getting soaked up by that expansion, housing-related businesses (like Berkshire's own Acme Brick and Shaw Carpet) can start to rebound.
While he has admitted being wrong on the timing of that recovery, long-time Berkshire investors are still backing his strategy.
"We think that now is a wonderful time to be an optimist about the United States of America," said Bill Smead, chief investment officer of Smead Capital Management. "We're happy to be philosophically aligned with what he's doing."
(Reporting By Ben Berkowitz)
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