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Acquired by Berkshire Hathaway in 1972 for only $25 million, See’s Candies today has over $400 million in annual revenues with just under a quarter of that as profit. That means it annually produces four times its acquisition cost in profit.
How can those profits continue to grow? The solution looks more and more to be to add stores in states where shoppers don’t currently have access to the joys of a See’s Candies chocolate lollipop. At least they can’t buy them year-round.
Currently there are more than 200 company-owned See’s Candies shops in the western half of the U.S., and limited distribution in department stores, along with a handful internationally in Hong Kong, Macau, Taipei, and Tokyo, and additional pop-up stores for the holidays all across the country. However, until recently, you couldn’t find a full-fledged store east of the Mississippi River. That began to change in 2013 with See’s opening stores in Ohio (in Cincinnati and Columbus) and two stores in Pittsburgh, Pennsylvania.
Now, the company is hinting that it is looking harder at the Eastern seaboard.
“We need to develop the markets and taste buds,” See’s Candies President and CEO Brad Kinstler said during a recent appearance at Stanford University’s Rock Center for Corporate Governance.
In 2013, Berkshire auctioned off an all-you-can-eat tour of the See’s Candy factory in California to benefit an education nonprofit. Who knows? Perhaps by 2016 that will be possible on the East Coast too. Have your sweet tooth at the ready.
© 2014 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.