Martha Stewart Living Omnimedia reported a larger first-quarter loss yesterday on lower advertising revenue, following the recent felony conviction of its founder.
The company lost $20.3 million in the first quarter, compared to a loss of $4.5 million the year earlier, largely on declining revenue from its publishing and television businesses and also as a result of a larger-than-expected income tax expense.
Chief Executive Sharon Patrick said that advertisers “are still skittish” regarding Martha Stewart’s legal troubles.
The domestic diva was found guilty in March of conspiracy, obstruction of justice and lying to federal investigators and is scheduled to be sentenced June 17. A judge just rejected her appeal for a new trial.
Publishing revenue, the company’s largest source of income, declined nearly 30 percent to $24 million in the quarter, even though circulation of the company’s flagship Martha Stewart Living magazine held steady at 1.8 million.
“They appear to be down to their hardcore subscribers,” said research analyst Dennis McAlpine. “Most of them don’t care whether Martha’s in jail or in Timbuktu.”
MSO shares dropped 6.29 percent to $9.09.
The company is continuing to distance itself from the tainted domestic diva and focus instead on its brand names. Patrick said 80 percent of readers surveyed said they favored the changes, including:
Recasting Stewart’s “remembering” column, beginning with the June issue of Martha Stewart Living, as a contributor’s page that will eventually become a how-to column.
The September issue of the magazine will showcase a redesigned cover that will emphasize the word “Living.”
And, as of July, the tagline “From the Kitchens of Martha Stewart” will no longer appear on the cover of another magazine, Everyday Food.
Total revenue in the quarter dropped 23 percent to $44.5 million.
The only area to show a gain was merchandising, with a 4.5 percent increase on the strength of the Martha Stewart Everyday products sold in Kmart stores.