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Martha's Woes

Martha Stewart shows 4Q revenue loss to end 'exceptionally difficult year'

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Martha Stewart Living Omnimedia Inc. (New York) announced that revenues for its fourth quarter ending Dec. 31, 2002, were down 6.5 percent, while revenues for the full year increased 2 percent.

Merchandising segment revenues increased 11 percent in the quarter, partly a result of its higher royalty rate under the company's contract with Kmart, partially offset by Kmart store closures.

“We continue to take a long-term view of our company, and we are proud of our many accomplishments during this exceptionally difficult year,” said chairman and ceo Martha Stewart. “Our excellent balance sheet and diverse revenue streams provide a solid financial framework for our company as we enter 2003. With our dedicated and talented employees, along with the support and cooperation of our business partners, we will continue to produce and deliver high-quality original content and products for our wide and loyal consumer audience. “

The “exceptionally difficult year” included the bankruptcy by Kmart Corp. (Troy, Mich.), Martha Stewart's retail brand partner, and charges of stock-trading irregularities filed against Stewart herself.

“During the fourth quarter, ” Stewart continued, “we were particularly pleased with the outstanding success of our new Martha Stewart Everyday Holiday product line. We are encouraged by the strong consumer and advertiser response to the test of Everyday Food, our new digest-sized magazine, as well as favorable industry reaction to our Martha Stewart Signature Furniture offerings. Keeping focused on our commitment to reach break-even in our Internet/Direct Commerce segment, we have decided to significantly scale back the operations of that business segment. By reorganizing this aspect of our business, we will be able to focus our efforts on our core strengths in this segment and deliver overall improved results in the future.”

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The changes in the company's Internet/Direct Commerce operations will consist of a reduced circulation catalog offering a more tightly focused product assortment that is highly branded and seasonal in nature, according to president and coo Sharon Patrick.

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