U.S. News

Martha Stewart Quarterly Loss Widens


Martha Stewart Living Omnimedia reported a wider quarterly loss Wednesday, due in part to weak sales of its products at retailer Kmart .

The second-quarter net loss was $6.7 million, or 13 cents a share, compared with a loss of $1.2 million, or 2 cents a share, in the same quarter a year earlier. Excluding items, the company posted a loss of 9 cents a share in the latest quarter.

That was slightly ahead of expectations, with analysts polled by Reuters Estimates on average calling for a quarterly loss of 10 cents a share.

Revenue rose 7.7 percent to $73.4 million on higher advertising sales at its flagship magazine, Martha Stewart Living.

But analysts pointed to lower than expected profit from its retailing division, while shares of the company fell 4 percent in New York Stock Exchange trade.

Morgan Stanley analyst Lisa Monaco cited the company's reference to "'erosion' in the audience for the daily syndicated show" and added that it may be an indication that consumers are losing interesting in the Martha Stewart brand.

But Monaco noted in her research report that corporations, including retailers, appear to still have strong interest in the brand given the number of partnerships Martha Stewart Living has recently struck.

"That said, we believe the stock will not move materially higher until there is some indication about the success of the new Macy's line in September and there was little in today's release to conclude one way or the other about the success of new partnerships such as Costco," she wrote in a research note.

For its part, the company also warned that revenue in the third quarter would likely fall short of current estimates on Wall Street. In its earnings announcement, it said it expected to post revenue in the range of $68 million to $70.5 million and an operating loss in the range of $7.5 million to $8.5 million.

Analysts on average had been expected the company to report revenue $72.73 million for the third quarter.

Shares of the company were down 50 cents, or 3.7 percent, at $13.01 on the New York Stock Exchange.