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New merchandising onslaught looms for Martha Stewart

New York -- Sales of Martha Stewart licensed merchandise at Kmart continue to downtrend, but the stage is set elsewhere for a strategic advance, in line with the company’s overall approach, which Martha Stewart Living Omnimedia (MSLO) president and ceo Susan Lyne characterized as a move “to diversify our product line and broaden our distribution channels.”

MSLO cfo Howard Hochhauser said that comp store sales of Martha Stewart products at Kmart for the quarter were down 7.2%, and for the year to date dropped 3.4%. He said that soft home was the most difficult area, while garden and housewares were trending up.

Speaking to analysts during yesterday’s third quarter conference all, Lyne said the diversification plan applies across all four business segments -- publishing, broadcasting, merchandising, and internet.

Lyne pointed to the recent and coming launches of:

  • Martha Stewart Colors interior and exterior paint color program due in all 1,275 Lowe’s stores in early 2007;

  • The 2007 launch of Martha Stewart Collection at Macy’s with up to 1,400 products;

  • The 2007 debut of floor coverings, lighting and bathroom fixtures, kitchen cabinets and closet organizers in KB Studios;

  • The recent area rugs license with Safavieh;

  • Martha Stewart Crafts Collection to launch in April with 37 linear feet in the more than 900 Michaels stores;

  • The current re-launch of the internet site, including e-commerce functions, along with alliances with Google Video and Yahoo Lifestyle.

Lyne noted that revenues from many of these initiatives will not be forthcoming until the second half of 2007 – but also noted that MSLO often can derive 70% margins from its licensed merchandising programs.

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