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MSLO's merch business drives business in 2Q

New York -- Martha Stewart Living Omnimedia Inc.'s merchandising business segment proved pivotal in the second quarter as it resulted in an almost double-digit revenue increase - which was driven in part by textiles.

Operating income for the merchandising segment was $8.8 million for the second quarter compared to $7.3 million last year.

During the MSLO quarterly earnings presentation this morning, senior evp of merchandising Patsy Pollack noted merchandising revenue grew to $12.9 million, up 9% from $11.8 million in the year-ago period. This growth, she said, was "driven by our strong performance at Home Depot, our expansion of crafts, and our strength at Macy's," among other pluses that included continued momentum with the Emeril brand.

MSLO's second quarter, which ended June 30, generated overall company revenue of $54.9 million versus $55.3 million in last year's second quarter, which included a $2.2 million termination payment related to the 1-800-Flowers.com relationship that concluded in the quarter.

Charles Koppelman, executive chairman and principal executive officer, said the company's second-quarter results "were led by continued momentum in our merchandising business, which delivered 34% revenue growth and strong adjusted EBITDA growth after excluding a favorable onetime gain in the prior year's quarter."

Textiles were a highlight for the quarter, as the category was credited with leading MSLO's business at Macy's, which the company said, "remains a top contributor to our merchandise business, with double-digit growth."

The Martha Stewart craft merchandise "continues to perform well at Michael's," as well as at Jo-Ann Stores, where this segment was extended to recently.
Martha's pet business at Petsmart this month celebrates its first anniversary after a "strong" second quarter, and is expanding this fall with several new products for cats, including bedding.

In sum, MSLO said, the Martha Stewart merchandise collections at Home Depot and Macy's as well as its crafts and pets businesses "continue to track at levels that keep us comfortable with our EBITA targets."

Lisa Gersh, who joined the company in June as president and coo, offered a few remarks during the call.

"In my first weeks since joining MSLO, I have enjoyed very productive engagement with our people, our partners and our senior management. I'm looking forward to working together with our teams as we leverage the foundation of our strong and valuable brands to produce profitable and sustainable revenue growth for MSLO," she said.

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