The company founded by Westport’s Martha Stewart Martha Stewart Living Omnimedia Inc. (MSO)—posted a wider loss than Wall Street expected in the second quarter today and warned of bigger-than-expected losses in the third quarter.
The company has seen its profits and revenues decrease since its founder and former chairman got entangled in what eventually resulted in her sentencing last month on obstruction of justice chargers.
In a move to focus on the company’s strongest assets, the New York-based company also announced that it will eliminate its direct commerce business by the end of the year.
But the company said it will continue with its direct-to-consumer floral business, marthaflowers, as well as its content Web site, www.marthastewart.com.
MSO also announced the launch of Everyday Food, a new television program that will air on PBS stations across the United States, building its success of its new magazine that bears the same title.
It is the latest step to distance itself from Stewart’s name, which is on an array of products.
MSO posted a loss of $19.29 million US, or 39 cents per share, in the three months ended June 30 in contrast to a profit of $931,000, or two cents per share, in the year-ago period.
Analysts surveyed by Thomson First Call expected a loss of 33 cents in the second quarter.
Revenues were down 33 per cent to $44 million, dragged down particularly by its publishing division, which has suffered from a defection of advertisers.
The company said it expects to post a loss of 50 cents a share in the third quarter, reflecting higher marketing costs in the period. Analysts anticipated a loss of 33 cents per share.
However, the company predicted that fourth-quarter losses should be “substantially reduced” compared to third-quarter levels largely due to the significant amount of revenues to be recognized by its merchandising segment as a result of certain minimum royalty guarantees.
Stewart, who was convicted in March on charges she lied to investigators about a stock sale, was sentenced July 16 to five months in prison and five months of house arrest. She was also fined $30,000. The sentence was stayed, pending appeal.
Stewart resigned as chief executive and chairwoman of the company in June 2003, after her indictment. Following her conviction, she stepped down as chief creative officer and resigned from the company’s board, but remains as founding editorial director.
