On this day in economic and financial history...
For generations of Americans, the Sears (NASDAQOTH:SHLDQ) catalog was a window to the culture of consumerism, a source of amusement, and even a supply of toilet paper in the years before indoor plumbing. From 1888 onward, the Sears, Roebuck and Co. catalog sold wares from clothing to housing -- complete house kits were sold between 1908 and 1940 via mail order, shipped by boxcar, and assembled by enterprising families. The catalog's historic legacy ended on Jan. 25, 1993, when a beleaguered Sears announced that it would end catalog distribution while also closing 113 stores and eliminating 50,000 jobs.
The Internet had not yet become a source of retail competition in 1993, and Amazon.com was still a twinkle in Jeff Bezos' eye. But Sears nevertheless fell victim to the age-old threat of superior competition, in the form of Wal-Mart and Home Depot. The Sears catalog had generated $3.3 billion in sales for the prior year, but inefficient business organization resulted in $175 million in losses. A holiday-season profit spike couldn't erase 20 straight years of losses for the venerable mail-order operation.
Robert F. DeLay, editor of a direct-marketing newsletter, told The New York Times: "To see it die ... your heart skips a beat because it was something that was so American. Nonetheless, the world has changed, and the catalogue has not changed with it." The Sears "big books," weighing in at more than 1,000 pages, were slow to adopt toll-free 800 numbers and credit card sales, and most customers had been required to pick up items at Sears stores directly.
At the time, Sears was the third-largest retailer in the United States, only narrowly trailing Kmart and bringing in about 72% of the annual domestic revenue of Wal-Mart. Sears never came close to Wal-Mart again, and in 1999 it was ignominiously replaced on the Dow Jones Industrial Average (DJINDICES:^DJI), which it had been part of since 1924, by Home Depot. Wal-Mart had been added to the index two years earlier. Despite a 2004 merger with Kmart, the "augmented" Sears Holdings earned only $2.4 billion more two decades after it ended the catalog -- a decline, in real terms, of 35%. Meanwhile, Wal-Mart's inflation-adjusted annual revenue grew more than threefold over the same time period.
Now that's long-distance
The first transcontinental telephone call was placed on Jan. 25, 1915, with the mayors of both New York City and San Francisco participating in an event that brought the origin and the future of the telephone system together. Alexander Graham Bell, the elder statesman of the industry, also participated in the momentous call placed nearly four decades after his first telephone patents, as did his valued assistant Thomas A. Watson. Voices transmitted across 3,400 miles of wire echoed their first telephone calls, validating their lifetime of work on the world-shrinking technology.
At one point, Bell successfully tested the transmission using an exact replica of the very first telephone he made in 1875, exclaiming, "What wonderful progress has been made by the Bell System since then to enable our voices to be transmitted over a circuit of 6,800 miles without the least apparent distortion or weakening."
The Bell System, also known as AT&T (NYSE:T), was already a colossus -- it was then less than a year removed from its first antitrust battle with the federal government. Its transcontinental line, according to the Los Angeles Times, contained 1,480 tons of wiring in one circuit, required 130,000 poles, and took approximately two years to complete. The line would be opened to the public a little more than a month later at an initial cost of $20.70 for 3 minutes of time. In modern terms, that would be like paying more than four of AT&T's monthly cell phone bills to place one brief phone call.
The other transcontinental milestone
The first transcontinental passenger-jet service took off from Los Angeles on Jan. 25, 1959, nearly a century after the completion of the first transcontinental railroad. American Airlines (UNKNOWN:AAMRQ.DL) became the first airline to use Boeing's groundbreaking 707 jet for long-distance overland service that day, ferrying 112 passengers to New York City in a mere 4 hours and ten 10 minutes, thanks to favorable tailwinds. The Jet Age was under way.
Day one for the Dow's health insurance leader
UnitedHealth (NYSE:UNH) was founded in Minnesota on Jan. 25, 1977 as United Healthcare, a reorganization of Charter Med Incorporated, a pioneering health-insurer led by health care professionals. From its earliest years, UnitedHealth became a leader in private health-insurance alternatives to government plans. UnitedHealth went public in 1984 and joined the New York Stock Exchange in 1991. Since that time, its phenomenal growth has resulted in outsize gains to shareholders and an impressive roster of more than 75 million insured participants. The Dow, recognizing UnitedHealth's leadership role in the health insurance industry, added the company to its roster September of 2012.
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