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Blair Corporation

Blair Corporation

220 Hickory Street
Warren, Pennsylvania 16366
U.S.A.
Telephone: (814) 723-3600
Fax: (814) 726-6123

Public Company
Incorporated:
1910 as New Process Co.
Employees: 2,300
Sales: $506.8 million (1998)
NAIC: 45411 Electronic Shopping and Mail-Order Houses

Blair Corporation is a retailer of low- to mid-priced mens and womens clothing and home products. Apparel accounts for approximately 88 percent of the companys sales, with home products making up the remainder. Blair primarily sells its products via direct mail merchandising pieces, including multisheet, letterstyle mailings and catalogs. It also operates two retail storesone in Pennsylvania and one in Delawareand two outlet stores in Pennsylvania. The companys products are manufactured by a number of independent suppliers, many of whom produce merchandise based on Blairs specifications. Blair receives and processes orders in its corporate offices in Warren, Pennsylvania. Orders are filled at and shipped from a nearby distribution center in Irvine, Pennsylvania.

191030: A Suitcase Full of Raincoats and a Good Idea

Blair Corporation was founded and built by John L. Blair, a young law student at the University of Pennsylvania. In 1910, Blair was nearing the end of his law studies when a classmate approached him with a business venture. The classmate, who had inherited a raincoat factory, wanted Blair to become the companys sales manager. Blair agreed to take a suitcase full of raincoats home with him for Easter break and consider the offer. Making sales calls at various stops on his way home, he managed to sell a single black raincoat to an undertaker he encountered in a Kane, Pennsylvania, shop. The shop owner, however, declined to carry the coats. Blairs experience convinced him that the best way to sell the coats was to market them directly to consumers. He was also convinced that the best way to reach those consumers was through the mail.

Calling his venture the New Process Rubber Company (because the raincoats had a layer of rubber between two layers of cloth), Blair borrowed $500 to print and mail advertising flyers to 10,000 undertakers across the nation. In response, he received 1,200 orders for the coats, which his classmate quickly set about producing. Soon, customers were asking Blair to offer other reasonably priced clothing items by mail. He obliged by expanding his product line, and the business grew at a rapid pace. Blairs younger brother Harold, who was still in high school, began helping out at the New Process Company on weekends.

In 1920, Blair added a small retail store to his mail-order business and made another of his brothers, Lester, its manager. The store, which was located near the companys headquarters in downtown Warren, was soon joined by another in Jamestown, New York. The direct-mail side of the business continued to grow, also. Although Blair had purchased several existing buildings in Warren to serve as warehouses, he soon discovered that more space was needed. In 1927 and 1928, a new, three-story building was added to the New Process Companys facility.

The late 1920s also marked the companys transition from a privately held company to a public one. In 1927, shares of New Process Company began trading on the American Stock Exchange. It was only the fifth company to be listed on the new exchange.

Meanwhile, the companys product line continued to expand. In addition to apparel, which was offered on a seven-day, free-trial approval basis, Blair began experimenting with a more diverse line of merchandise. Some of the items available to New Process customers in the 1920s and 1930s included electrical appliances, cameras, auto tires, motor oil, fans, healthcare products, and perfume. The company also offered a three-volume set of books, written by its own executives and entitled The Book of Success.

1930s-60s: Setbacks and Advances

The advent of Depression spelled hard times for businesses all across America, and New Process was no exception. The generally bleak economic conditions were only made worse for the company by an October 1933 fire that destroyed many of its buildings, an estimated $500,000 loss. Blair worked tenaciously to ensure that New Process kept running, however. The companys operations resumed within ten days of the fire, and a new building was erected to house the company within a year.

From the late 1930s through the early 1950s, expansion was the watchword at New Process. Increases in sales resulted in a continuing need for more employees, more warehouse space, and more equipment. The company responded both by purchasing buildings adjacent to its property and by building additions to its existing facility. Through a series of property improvements, the New Process headquarters eventually evolved into a sprawling complex capable of handling its ever-increasing order processing and fulfillment operations. The completed plant covered almost an entire city block.

One particular expansion caught the attention of the local consumers. In 1941, the company purchased a former hardware company building, which came to be known as the Annex, for use as a warehouse. New Process also used the Annex to hold annual warehouse sales, which gave shoppers the chance to get rock-bottom prices on closed-out and overstocked merchandise. The sales caused quite a stir, drawing thousands of people from miles away. It was not uncommon to see customers lined up for blocks outside the Annex during one of its warehouse sales. Some even camped on the sidewalk overnight to ensure a good place in line.

While expanding physically, the company also made gains in productivity by implementing new equipment. One such piece of equipment was the addressograph, a machine that used stamped metal plates to print addresses. For several decades, New Process workers had used typewriters to address each of the companys thousands of mail pieces individually, a tedious and labor-intensive task. The introduction of the addressograph near the middle of the century provided a great boost in efficiency and productivity.

The addressograph was but a humble forerunner, however, to innovations that were to come. In 1965, New Process installed its first computer system: a small IBM with auxiliary machines. In 1969, the addressograph was replaced by electronic data processing equipment. In place of the six million metal address plateswhich occupied thousands of square feet of floor spacethe companys entire mailing database was stored on 80 reels of EDP tape. Soon, computers were used in virtually every department at New Process, from order processing to advertising to mailing.

The 1960s also marked the passing of the companys founder and leader, John Blair, and of his brother Lester, who was then serving as vice-president and advertising manager. Upon Blairs death his son, who was also named John, assumed leadership of the New Process Company. He had previously been the companys personnel director.

1970s: A New Home for Distribution

As the 1970s got underway, New Process celebrated the mailing of its two-billionth advertising piece. The company also opened two new outlet storesone in Warren, and one in Erie, Pennsylvaniaand expanded several of its departments to accommodate the increasing number of mailings and product shipments.

In 1971, it appeared that New Process had finally outgrown its long-time home in downtown Warren. As a result, the company acquired 189 acres of land near Irvine, Pennsylvaniawhich was just southwest of Warrenand planned to build a new complex to house its merchandise handling operation. The 348,000-square foot distribution center opened in 1973, and soon all warehousing, shipping, and returns were being handled by the hundreds of employees located there. Customer orders were shuttled each morning from the company headquarters, which remained in Warren, to the distribution center; and an average of 48,000 orders were shipped out every day. New Process warehoused around $25 million worth of merchandise in its new complex.

The expanded warehouse and shipping facility enabled the company to once again expand its product line. It did so in 1977 with the addition of a Home Furnishings division. New products included in the line included linens, draperies, furniture covers, area rugs, and bath accessories.

The New Process Companys enhanced capacity, in combination with the expanded product line, produced dramatic growth in sales and earnings throughout the 1970s. For the years 1970 to 1974, average sales were approximately $120 million, more than twice the average for the years 1965 to 1969. Net income increased from an average of $3.3 million to an average of $8.2 million. The growth rate remained similarly high during the second part of the decade, with sales climbing to the $200 million mark and earnings averaging $9.5 million.

Company Perspectives:

Providing quality products at reasonable prices, offering credit appropriately and unconditionally guaranteeing everything we sell are aspects of connecting with customers and building strong, lasting relationships with themin essence, delivering on our promise Because Good Clothing Doesnt Have to Cost a Lot.

198595: Shifting to Catalogs

By the beginning of 1985, New Process Company had more than 1,800 employees and offered 1,255 different items through its mail-order operation. The company had set new records with sales of $299 million and earnings of $18.7 million. All three of its merchandise groupswomens apparel, mens apparel, and home furnishingswere showing gains in revenue and profits. It was on this high note that company president and chairman John Blair retired, leaving New Process in the hands of Murray McComas. McComas had been with the company since 1962, when he started his employment in the advertising department. Along with the change in leadership came a change in identity; in 1989, the company officially changed its name from New Process Company to Blair Corporation.

In the early 1990s, Blair undertook an ambitious renovation of its headquarters. Relocating its distribution operation to the new facility in Irvine had vacated a great deal of usable space, resulting in the need for work area reconfiguration. In addition, the buildingswhich Blair had occupied since 1921needed modernization and upgrading. The renovation involved replacing most of the existing office equipment with modern workstations, making the entire building handicapped-accessible, and enlarging and remodeling the retail store section of the facility.

By 1993, Blair had built a mailing list of more than 15 million. Unlike most of its mail-order competitors, the company did not use catalogs. Instead, its letter-style mailings more closely resembled the type of flyer John Blair had originally sent out back in 1910. They generally included several individual sheets containing product information, along with a cover letter signed by the companys president. In 1993, however, Blair began testing a catalog format for its home furnishings line and other non-apparel items. Finding that the catalogs were well-received by its existing customer base, the company expanded its distribution to include potential customers. It also began creating pilot catalogs for its mens and womens apparel.

Blair released test mailings of mens apparel catalogs in July 1995 and a test batch of womens catalogs followed in January 1996. When the mailings produced promising results, the company began full mailings to both prospects and existing customers. By the end of 1996, Blair had mailed 60.3 million catalogs. That number increased to 100.7 million in 1997, and jumped to 128.2 million in 1998. As the company relied increasingly on catalogs as its marketing vehicle, its traditional letter-style mailings decreased. Between 1996 and 1998, the number of these mailings fell from 176 million to 88.5 million.

With the shift to catalog marketing came a slight shift in Blairs target demographic. The company had traditionally targeted low-to-moderate income customers who were aged 50 or older. The company believed, however, that the catalog approach enabled it to reach a younger population as well. Therefore, it redefined its customer profile as over 40, low-to-moderate income. According to Blairs 1998 annual report, its newly defined market was the fastest growing segment of the population.

Looking Ahead

Since its inception in 1910, Blair had maintained an impressive track record of surefooted, quiet growth. As the 20th century drew to a close, it appeared probable that the company would continue making gains in the coming years. One of the most significant avenues of growth was likely to be its newly expanded target market. By redefining its target age range to include 40-to-50-year-olds, Blair had opened the door to a whole newand growinggroup of consumers.

To focus advertising efforts on this group, the company planned a year 2000 launch of a new apparel catalog geared to working women. Also planned were a dress and casual mens apparel catalog and a gifts and collectibles catalog. Additional catalog releases were likely in the future as Blair continued its shift to that form of marketing. The company also had plans to focus on its Internet presence, with an eye toward joining the ranks of direct-mail companies that also offered online shopping. Blairs increased use of catalogsand the potential use of e-commercewas expected to result in a decrease of its letter-style mailings.

The company was also gearing up for an impending change in leadership. Blairs president, Murry McComas, planned to retire in December 1999. He was to be replaced by John Zawacki, a Blair veteran of 28 years. Zawacki was the vicepresident and general manager of the companys womenswear division and a member of the board of directors.

Principal Subsidiaries

Blair Holdings, Inc.

Principal Competitors

Fingerhut Companies, Inc.; Ames Department Stores, Inc.; Brylane Inc.; Burlington Coat Factory Warehouse Corporation; J.C. Penney Company, Inc.; Kmart Corporation; Ross Stores, Inc.; Sears Roebuck and Co.; The TJX Companies, Inc.; Target Stores, Inc.; Wal-Mart Stores, Inc.

Key Dates:

1910:
John L. Blair founds the New Process Company.
1920:
New Process opens its first retail store.
1927:
Company begins trading on the American Stock Exchange
1962:
Founder John Blair dies; his son becomes president and chairman of the board.
1973:
Merchandise handling operations are moved to a new distribution center in Irvine, Pennsylvania.
1989:
The New Process Company changes its name to Blair Corporation
1993:
Blair begins testing a catalog format for its direct-mail pieces.

Further Reading

Anderson, Manley, Blair Corp. Sets Open House for Today, Post-Journal (Harrisburg, Penn.), August 26, 1995, p.5.

Blair Corp. Opens Retail Store, Post-Journal (Harrisburg, Penn.), December 10, 1992.

Gannon, Joyce, Blair Enjoys Quiet Success in the Clothing Business, Pittsburgh Post-Gazette, March 26, 1991, p.2.

75th Anniversary Book, Warren, Penn.: Blair Corporation, 1985.

Shawna Brynildssen

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Blair Corporation

Blair Corporation

220 Hickory Street
Warren, Pennsylvania 16366-0001
U.S.A.
(814) 723-3600
Fax: (814) 726-6376

Public Company
Incorporated:
1924 as New Process Company
Employees: 2,300
Sales: $486.6 million (1997)
Stock Exchanges: American
Ticker Symbol: BL
SICs: 5961 Catalog & Mail Order Houses, Retail

Blair Corporation sells womens and mens apparel and home furnishings by mail. Its product lines are geared toward low- and middle-income buyers, emphasizing quality at a reasonable price. Womens clothing represents approximately 60 percent of Blairs sales, followed by menswear at 25 percent. The remaining portion of its sales is taken up by home furnishings. Blair mainly solicits customers through direct mailings of letters and circulars, though in recent years the company has added a catalog as well. Blair has no manufacturing facilities of its own. The company maintains a merchandise distribution center and a mail processing plant in Irvine, Pennsylvania, close to its administrative headquarters in Warren. Blair also runs two outlet stores and two retail stores, all of which are located in Pennsylvania and Delaware.

Early History

Blair Corporation was founded by John L. Blair, a law student from Warren, Pennsylvania. In 1910, while he was in the last year of law school at the University of Pennsylvania, he took up a business venture with a classmate who had recently inherited a raincoat factory. The classmate asked Blair to market the coats for him. Thus, while on his spring break, Blair dutifully tried to sell the black coats to merchants in the towns between Philadelphia and his hometown. In one town, he sold one of the black raincoats to an undertaker, but he could not persuade any store to buy his black stock, because tan was the color in fashion at that time. Blair decided to contact undertakers directly by mail. He borrowed $500 and used the money to print and mail flyers. He solicited 10,000 undertakers, and in no time had sold the entire first batch of 400 black raincoats.

Blair decided to pursue this business, and named his company the New Process Rubber Company, after the process of sandwiching rubber between two layers of cloth to make the raincoats waterproof. But the firm quickly expanded beyond its first product line, and offered other goods by mail as well. In consequence, Rubber was dropped from the company name in 1916. John Blairs New Process Company sought out all kinds of low-cost apparel and advertised it by mailing letters and flyers to its growing customer list.

The company outgrew its quarters several times, starting in the basement of a Warren furniture store, moving next to a third floor loft above a dry goods store, and in the 1920s expanding into a string of brick buildings along Hickory Street. Blairs two younger brothers, Harold and Lester, joined the company, and even Blairs father worked with him for a time. New Process pioneered a seven-day free trial approval for its goods, letting customers test their purchases for a week, with the right to return anything unsatisfactory. The simple flyer that had advertised black raincoats gave way to more sophisticated mailings featuring photos of professional models, or else spirited drawings. Value was the key to all of New Processs goods; they were bargains that could be obtained only by mail.

By the 1920s, the company was offering a gamut of goods, from silk stockings and pearl necklaces to motor oil and Gladstone bags. Cigars, pajamas, dolls, shoes, furs and footballs all found a place in the New Process line. For a while, the company also offered a three-volume Book of Success, penned by the successful president of the company, John L. Blair, and several of his co-executives. In 1924, New Process incorporated as a public company, and listed its stock on the American Stock Exchange.

Through the Depression into Postwar Expansion

New Process expanded its customer list rapidly in the 1920s, at a time of growing consumerism. In 1927, the company built a large brick three-story building behind its Hickory Street complex, the first building it had constructed for itself. When the stock market crashed in 1929, leading into the Great Depression, many of New Processs customers were hard hit. The company struggled to keep afloat. Net sales for the period 19301934 dipped to about half what they had been from 19251929. Nevertheless, net income averaged over the two periods to about the same. New Process continued to search for new customers, and was on its way to becoming one of the largest mail order companies in the world. The companys resilience was tested in 1933, when an early morning fire gutted all of New Processs Hickory Street buildings. Workers salvaged what inventory they could, and moved it to the building the company had built in 1927. Remarkably, the company was operating again in ten days, and within a year New Process had erected a new, more modern building at the site of the fire.

By the end of the 1930s, New Process was expanding again, with sales figures equal to or better than those of the late 1920s. The company purchased additional warehouse space and expanded and modernized its existing facilities. Presumably because the company offered bargain goods, its stock sold well during the years of war-time scarcity. After World War II ended, sales boomed at New Process. Items such as nylon stockings, unavailable during the war, were big sellers. The company added an automated conveyor system to its packaging department in 1950, and added footage to it in 1952 and 1954. The conveyor belt grew to nearly half a mile long, and a large staff packed, taped, weighed and addressed the outgoing orders.

New Process continued to build and modernize. In 1965, the company installed its first computers. First typewriters and then specialized machines called addressographs had been used previously to print the thousands of labels for the companys direct mailings. Using computers, New Processs workers could turn out address labels significantly faster and less laboriously. The company also gained storage space. The old addressograph system used metal plates for each customer address, and by 1965 there were six million of these plates, taking up thousands of square feet of floor space. In contrast, the tape reels used by the computer occupied a only a closet-sized space. But the growing company was still in need of storage, and throughout the 1960s continued to build and purchase warehouses.

1970s and 1980s

Both founder John L. Blair and his younger brother Lester died in 1962. The remaining brother, Harold, had retired from the company in 1960, and passed away in 1971. Blair family members retained a large percentage of the firms stock. But in the early 1970s institutional investors suddenly discovered the company, and apparently fell in love with its long record of rising sales, low debt, and consistent dividend payments. On Wall Street, money managers deemed New Process a one-decision stock, meaning that once the decision had been made to buy it, there was no second decision coming up regarding whether or not to sell. New Process stock became so hot that it soared from around $20 a share in 1971 to over $70 a year later. This frenzy for the stock was not encouraged by New Processs management, which was famous for not taking calls from Wall Street analysts. The company published no earnings projections, and so did nothing to prepare its adherents for a bump that came in 1973. Profits dipped, and the one-decision buyers were apparently so dismayed that they forgot their philosophy and bailed out. The stock dropped as low as $3 in 1974.

Nevertheless, the company was in very good shape financially. By 1976, New Process had over 11 million customers across the U.S., employed close to 1700 people, and had sales of just under $200 million. After expending capital on building expansions in the early 1970s, the company was essentially free of debt by 1976. Its sales fluctuated some in the late 1970s, with some losses attributed to the passing of the leisure suit fad. But one strength of the company was that it tended to have higher sales during recessions. Because it catered to cost-conscious consumers, it found more customers during economic downturns. So in 1979, a disastrous year for many industries, New Process had record sales, and seemed to be an enviably stable company.

By 1984, New Process was the largest publicly-held direct mail business in the U.S. The company, now run by John Blair Jr., the son of founder John L. Blair, was using its computers to generate mailings every two weeks to over 12 million targeted customers. The company sometimes took in as many as 40,000 orders a day. New Processs inventory control, order routing, and much of its packaging was now automated, so orders were turned around very quickly.

In the mid-1980s the company was still virtually free of debt. A home furnishings division, begun in 1977, was contributing a substantial portion of earnings to the companys profits by 1985, and overall earnings were at a record high. Sales grew at a rate of over 10 percent annually throughout the 1980s, and the company seemed able to adjust quickly to financial challenges. For example, when increased postal rates ate into profits, the company researched its potential market more thoroughly, and targeted its mailings to get a higher response rate. As a result, New Process attracted more orders with fewer mailings, and its postal costs as a percentage of sales dropped.

Company Perspectives:

Our current priorities, all of which support the critical need to add more customers to our file, include catalog marketing and the development of expanded database capabilities in the areas of target marketing, credit management and mail stream optimization.

Into the 1990s

In April, 1989, the New Process Company formally changed its name to Blair Corporation, after its founder. The Blair family still retained over 30 percent of the stock, and there was much about the company that was old-fashioned. For instance, where most mail order businesses relied on catalogs, Blair persisted in its old formula of mailing circulars and fabric swatches stuffed in envelopes. But the old-fashioned image belied a company that was always willing to modernize where needed. For example, Blair spent approximately $18 million in the early 1990s to build a new mail facility.

The 1990s, however, were a time of transition for the company. Though sales rose steadily year by year, profits were up and down. Blairs customers were very sensitive to price increases, and it was difficult for the company to pass on its own rising costs. The company tried to get out of its difficulties by extending more credit to customers. In 1996 Blair launched an aggressive program to boost sales through liberal credit, and ended up collecting a lot of bad debt. Though customers responded to Blairs generous credit policy by buying more, the company found it difficult to collect payment in many instances. The push for higher sales ultimately hurt the company. Profits in 1995 stood at over $25 million on sales of over $560 million; the next year sales dropped slightly to $544 million, but profits sank to $14.7 million.

Because its new credit policy was clearly not working, Blairs management agreed to change course, and the company instituted a new strategy in 1997. In order to get the best possible results from its mailings, the company resolved to develop a more sophisticated information system. Blair began to test databases that would give it more in-depth and accurate information about its products and customers. The new computer programs could analyze customers seasonal buying patterns and product preferences. An accounts receivable database allowed the company to extend credit selectively, targeting good customers and avoiding risky ones. Blair also decided to purchase demographic and lifestyle databases from outside sources, to supplement its own customer databases.

The company made other changes too. Blairs traditional customer base had been over 50 years old. In 1997, Blair decided to actively pursue a little younger age group, people aged 40 and over. This group was larger, and with broader tastes. And while many of its customers preferred the circular mailers Blair had always sent out, the company was aware that many younger consumers preferred to buy from catalogs. So Blair began developing catalogs for its womenswear, menswear and home products lines. The company did not want to shift over entirely to catalogs, but tried to offer different consumers the marketing format they were most comfortable with.

Sales and earnings fell in 1997, further emphasizing the importance of getting the new business strategies working. By early 1998, the company seemed to be in a better position regarding its bad debts. Earnings in the first quarter of 1998 were better than in the previous quarter. All in all, it seemed that Blair was cognizant of the problems which had caused its earlier difficulties, and was on the way to correcting them. The company had a long history of economic stability and a rich knowledge of the mail order industry. With these strengths, Blair appeared ready to continue its growth into the next century.

Principal Subsidiaries

Blair Holdings, Inc.

Further Reading

Abelson, Alan, Up and Down Wall Street, Barrons, December 23, 1985, p. 31.

Blyskal, Jeff, Mail Order for the Masses, Forbes, July 16, 1984, pp. 3536.

Cochran, Thomas N., Checks in the Mail, Barrons, September 19, 1988, p. 46.

Jaffe, Michael, Stocking Staffers? Forbes, November 26, 1990, p. 316.

Lazo, Shirley A., Speaking of Dividends, Barrons, May 18, 1992, p. 44.

New Process Company 75th Anniversary Book. Warren, Penn.: New Process Company, 1985.

Tenreiro, Michael, Blair Corp, Value Line, February 20, 1998, p. 1681.

Troxell, Thomas N. Jr., Aggressive Merchandiser, Barrons, March 8, 1982, p. 46.

A. Woodward

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