MSO Waits Patiently For Martha's Return

Michele SanFilippo, Staff Staff, February 28, 2005

New York — Martha Stewart Living Omnimedia remains focused on its principal brand and anxiously awaits the return of its founder from prison next month. Company executives said that home merchandise will be a key avenue for recovery.

According to the company's fourth-quarter conference call last week, home décor was a strong performer in the quarter with increasing sales of Martha Stewart Everyday products, driven primarily by new introductions of kitchen and laundry products at Kmart.

Future additions include: new designs in the five-star bedding collection set to debut this spring and the introduction ready-to-assemble furniture launching this June along with a fourth Martha Stewart Signature home collection.

“We will focus our efforts on our greatest assets: the Martha Stewart brand, our content and our creative capabilities,” said Susan Lyne, the new president and CEO of Martha Stewart Living Omnimedia. “As the most comprehensive and trusted source of how-to information for the home, we are actively exploring opportunities to develop new content, launch new brands and leverage our existing asset library through new distribution channels. We see opportunities to use our brand strengths and design capabilities to forge new merchandising and marketing partnerships.”

Lyne said MSO will use its brand equity to build business and launch new compatible brands. “We all look forward to Martha's homecoming next month and return back to the home,” she said. Lyne continued that the Martha Stewart brand offers a focus on creative solutions to common problems; design capabilities that anticipate need; a distinct aesthetic; a commitment to quality and value; and “a celebration of the effort to do something special.”

“The Martha Stewart brand remains the most important part of our business, despite our newer ventures with Body & Soul and Everyday Food magazines,” Lyne added, stating that MSO will continue to develop new content for new audiences. She explained that the readership of Martha Stewart Living remains loyal, with reader satisfaction and renewal rates at their highest levels in two years. She predicted Martha Stewart Living will see positive page growth and revenue in the second quarter, which would mark MSO's first positive growth in more than two years.

“I am confident that our focus on core strengths and our exploration of new opportunities for the future will lead the company on the pathway to recovery,” concluded Lyne. “We also are hopeful that the anticipated merger with Sears will offer us numerous opportunities for additional distribution and the ability to launch into new categories.”

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