Blair Corporation History

Address:
220 Hickory Street
Warren, Pennsylvania 16366-0001
U.S.A.

Telephone: (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

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.

Company History:

Blair Corporation sells women's and men's apparel and home furnishings by mail. Its product lines are geared toward low- and middle-income buyers, emphasizing quality at a reasonable price. Women's clothing represents approximately 60 percent of Blair's 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 Blair's 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. Blair's two younger brothers, Harold and Lester, joined the company, and even Blair's 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 Process's 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 Process's customers were hard hit. The company struggled to keep afloat. Net sales for the period 1930-1934 dipped to about half what they had been from 1925-1929. 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 company's resilience was tested in 1933, when an early morning fire gutted all of New Process's 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 company's direct mailings. Using computers, New Process's 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 firm's 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 Process's 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 Process's 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 company's 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.

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. Blair's 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 Blair's 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, Blair's 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. Blair's 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," Barron's, December 23, 1985, p. 31.
  • Blyskal, Jeff, "Mail Order for the Masses," Forbes, July 16, 1984, pp. 35-36.
  • Cochran, Thomas N., "Check's in the Mail," Barron's, September 19, 1988, p. 46.
  • Jaffe, Michael, "Stocking Stuffers?" Forbes, November 26, 1990, p. 316.
  • Lazo, Shirley A., "Speaking of Dividends," Barron's, 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," Barron's, March 8, 1982, p. 46.

Source: International Directory of Company Histories, Vol. 25. St. James Press, 1999.