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Key to Martha’s Media Empire Is Merch?

Martha Stewart Living Omnimedia lost 3.8% on Wednesday despite delivering a better-than-expected quarter. Apparently the 7 cents a share the company lost, compared to the 16 cents that Wall Street had predicted, weren’t impressive enough for investors. Well, Cramer has plenty impressed, and he thinks today’s dip may be “a fabulous buying opportunity.”

When people think Martha, they think media: Martha Stewart Living, Martha Stewart Weddings, The Martha Stewart Show. But this is a merchandising company, too. In fact, merch is the whole reason Cramer likes the stock. This product licensing accounted for about 80% of the company’s operating income in 2009 even though it was responsible for just 21% of revenues.

MSO shed its licensing agreement with Kmart back in January and entered into a Cramer-blessed partnership with Home Depot . Plus, Martha Omnimedia has deals with Macy’s , Hain Celestial , Petsmartand Sandals Resorts for company-branded products and services. It’s these B2B relationships that made Cramer say, “I there’s more upside here.”

With the stock down and the quarter strong, Cramer wanted to check in with MSO CEO Charles Koppelman. Watch the video for the full interview.

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  • Jim Cramer

    Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

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