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Martha looks to 'floor' competition with new entry

A day after her company's first quarter earnings squeaked past analysts' estimates by one penny, Martha Stewart unveiled the latest addition to her $36 million merchandise empire under the expanding Martha Stewart Signature label for the specialty channel.

Joining the initial Signature collections of interior paints and decorative fabrics is an 800-sku line of flooring by Shaw Industries, including area rugs, carpet, hardwood, linoleum, laminate, ceramic and porcelain tile, and natural stone. The collection will be made available to an extensive network of flooring retailers in the United States and Canada over the next eight weeks, and then to consumers in July.

Shaw Industries chairman and ceo Robert Shaw said the program should eventually reach some 2,000 doors.

They will be welcome additions, no doubt. Although the $182 million publishing franchise churns the most cash for Martha Stewart Living Omnimedia (MSO), the merchandising segment stepped up during the first quarter to become the second largest contributor of sales to the company. Further, its 41.5 percent sales leap during the first quarter, to $11.0 million, helped offset declines of 17.7 percent in the Internet/Direct segment and 7.5 in publishing as well as an anemic 4.2 percent gain in the television segment.

Nonetheless, with a 53.2 percent drop in first quarter earnings, to $2.9 million, and the fate of Martha Stewart Everyday partner Kmart casting a shadow over the franchise, MSO needs to plump its merchandising story beyond mass and into the mid-market.

Stewart herself last week reiterated that MSO's revised contract with Kmart has protected the franchise. She also asserted that comp sales on Everyday merchandise at Kmart are up 14 percent for the year — which would mean it is wildly outperforming the store.

Meanwhile, MSO looks to layer on sales through the expansion of Signature, whose 416 paint colors are available in 1,600 Sherwin-Williams stores and six collections of Martha Stewart Signature Fabrics sold through Calico Corners, independent retailers and designers. The new flooring collection will be presented at retail as a "total room/total home" solution, Stewart said.

"This is the beginning of what will be a really fine program," she added. "It's a unique way to approach the subject of living."

All of the Signature products are designed to coordinate together and include about 77 skus of area rugs, some of which Stewart showed off at last week's press preview. The rugs, which include both hand- and machine-mades, are available in a range of styles, such as loop pile, shag — "Who would have thought shag?" Stewart added — as well as patterns inspired by ingrain rugs. Made of polypropylene, nylon and wool, the rugs reflect rustic, traditional, modern and English country looks.

The program will also provide certified retailers with coordinated modular merchandising fixtures and guidelines to create an in-store shopping environment for customers. These include the Idea Center, which will have modular panels organized by color palettes that illustrate how the Signature collection's flooring, fabric, paint and furniture work together. The Work Center will allow the customer to sit down with a sales associate, a partner or a decorator and discuss design options and use available reference material. Satellite fixtures will display flooring categories such as area rugs.

In addition, Martha Stewart Omnimedia will launch a multimedia advertising campaign, starting with print ads in the September issues of lifestyle and shelter magazines. Radio spots on Westwood One, the national syndicator of the askMartha program, will also air.

The Martha Stewart Signature collection is positioned above the Martha Stewart Everyday mass market brand label available at Kmart and is differentiated from Martha Stewart Everyday by price point, ticket sizes and in-store service levels.

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