The scandal threatening to topple US homemaking queen Martha Stewart is already taking a heavy toll on the company that bears her name.
Martha Stewart Living Omnimedia – publisher, producer and merchandiser of all things Martha – posted net earnings of $0.93 million (€0.82m; £0.58m) for the second quarter, an 86% plunge from $6.7m a year earlier. Revenues slipped 16.3% to $65.8m.
President/ceo Sharon Patrick admitted the quarter had been “exceptionally difficult”. In June, Stewart resigned as MSLO chief executive after being arrested and charged with perjury, fraud and obstruction of justice [WAMN: 05-Jun-03].
The indictments relate to the style guru’s sale of nearly 4,000 shares in biotech firm ImClone one day before the stock price crashed on news regulators had rejected one of the company’s drugs. Federal prosecutors allege that Stewart was tipped off by ImClone founder Samuel Waksal, already in jail for insider trading.
The scandal has helped dent the circulation of Martha Stewart Living magazine and the audiences for her nationally syndicated TV show, pushing down ad revenues. The merchandising business has also declined, in part due to the closure of branches of Kmart, which stocks Martha products. And MSLO’s online operations have yet to make a profit.
Nor does the future look bright: MSLO is predicting a loss of $7m to $9m for the full year.
Continued Stewart: “We believe that the Martha Stewart Living core brand will continue to be under pressure until resolution of Ms Stewart’s personal legal situation.”
Depending on how the “legal situation” is resolved, this pressure could last even longer.
Data sourced from: multiple sources; additional content by WARC staff