• August 4, 2004

Martha Stewart Living Omnimedia announced poor earnings results for the second quarter of 2004, including a 33 percent revenue plummet from last year (from $65.8 million to $44.0 million) as well as an operating loss of $19.3 million for the quarter. The biggest hit at the company--still reeling from the recent conviction and sentencing of Stewart last month--occurred in publishing, as revenues sank 40 percent to $23.7 million.

Sharon L. Patrick, president and chief executive officer, said: "Our second-quarter results, while reflecting losses due to the negative effects of Martha Stewart's personal legal situation, primarily on the Company's advertising performance, were nevertheless in line with our expectations and previous guidance. We remain encouraged by the support for the Company from our large, stalwart core base of readers, viewers, and shoppers who remain loyal to our publications and quality products; and by our significant financial resources. Those resources--$158 million in cash and short-term securities and no debt--will allow us to manage through this period and invest in our future."

While the company faced significant business challenges in the near term, Patrick announced that it is expanding its TV presence with the launch of "Everyday Food," a new television program that will air on PBS stations nationwide beginning January 2005. "Everyday Food" represents an extension of a magazine of the same name launched in October 2003. The half-hour program will feature an ensemble cast of cooks offering quick, easy, practical solutions for preparing delicious everyday meals, using supermarket ingredients. The first season will consist of 26 weekly episodes.

Patrick did hint that staffing reductions would be necessary in its TV operations (the company placed Martha Stewart Living on hiatus earlier in the year). In addition, the company will eliminate its direct commerce business though it will maintain its profitable direct-to-consumer floral business, marthasflowers, as well as our content Web site, marthastewart.com.