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BRK.UN Quality of Goods


KFRCanuk
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Only anecdotal evidence here. IMO, BRK.UN is a lending company that masquerades as a furniture retailer.  Their modus operandi is to target the low end of the furniture market with nice looking, but fundamentally crappy furniture that you will probably be forced to chuck after 7-8 years of use.  They make essentially no money off the furniture sales, but rather scoop the majority of their earnings through financing furniture sales to suckers and by flogging extended warrantees on ignorant consumers.

 

The implication of this is that you can get inexpensive furniture there, and they are charging the right price....but you get what you pay for.  I'm not surprised to hear of quality problems, given their target market (ie, people poor enough to need to finance the purchase of a bed or chesterfield, and ignorant enough to buy extended warranties).  It's a good business!

 

 

SJ

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  • 2 weeks later...

BRK carries a wide range of products but I'm sure the bulk of their volume is low-end and poorer quality.

 

Gregson is a merchandising genius with a great track record so I expect continued improvement. I know the guys at FFH are very impressed with him. However, they diluted the crap out of it when they restructured a couple years ago so I wouldn't hope to see previous highs for decades.

 

I'm long the warrants (they often trade with no time value) since the restructuring and plan on holding for the foreseeable future.

 

FWIW

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Guest broxburnboy

I ended up with some of these (against my better judgement, at the urging of a pension administrator .. since dismissed) shortly after the conversion to an income trust.

In retrospect the poor performance of BRK.UN is only partially due to a botched expansion and a cyclical slowdown in the recession while highly levered. I've come to believe that the whole income trust implementation was really just a political gift to the shareholders of businesses who wanted to cash out.. notably in the oil&gas sector.

The tax break given to distributions increased the effective yield and hence pushed up the market price. An ideal time for owners like Bill Comrie to cash out, an ideal time for underwriters to make windfall fees and an ideal situation (apparently) for yield investors.

Unfortunately the idea was too popular with underwriters and the market was flooded with IPOs for income trusts whose business models were deeply flawed and usually overlevered but showed well on an IPO prospectus. The government was forced to suspend new issues and roll back the non real estate trusts.

Comrie has since bought back in (at a lower price than he sold) and is proceeding to turn the business around. I think going forward the company will continue to grow, but the current share price accurately reflects the actual value of the enterprise (about a quarter of the trust IPO price). And yes, the non appliance/electronic goods are of poor quality... reflecting the credit quality of the purchasers of whom there continues to be a steady supply.

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Well emailed brk.un investor releations and asked them if they had a metric for delivery of non damaged goods on first try. I didn't hear back.

 

It's really too bad that they have to roll multiple trucks for one delivery. I guess if they get the goods for $40 and charge $400 then it doesn't hurt them as much.

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I prefer by far to buy used furnitures. They usually sell for a fraction of the original cost and have years of use to help juge their quality. I sometimes hear complains from relatives who bought expansive new furnitures that got easily scratched in less than a year or so.

 

 

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I prefer by far to buy used furnitures. They usually sell for a fraction of the original cost and have years of use to help juge their quality. I sometimes hear complains from relatives who bought expansive new furnitures that got easily scratched in less than a year or so.

 

What about bed bugs? Do you cook the furniture up to 60 celcius somehow?

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