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MSLO: Macy’s relationship back on track

Looking for new merch partners, international growth

New York – With the Macy’s lawsuit behind it , Martha Stewart Living Omnimedia is enjoying a much better relationship with the retailer, MSLO execs said during this morning’s second quarter conference call with analysts.

In addition, shaking off the litigation has opened the way to additional merchandising agreements, both in the U.S. and abroad.

The multi-media company’s ceo Dan Dienst described the Macy’s partnership as “more than back on track” and said MSLO is seeing “renewed energy” from Macy’s for the arrangement that covers major home categories including bedding, bath and kitchen.

MSLO is negotiating for both merchandising and media deals with online companies, bricks retailers and potential licensing partners, he added. “We are open to any opportunity with any merchandising partner.”

International represents the biggest untapped territory. “Almost 35% to 40% of our traffic digitally is coming from overseas markets,” said Dienst. He pointed to China as a particularly ripe market, but also said that in the U.S. and Canada there are still “white space opportunities” to be had.

For the second quarter ended June 30, merchandise revenues fell 8.7% to $14.7 million and operating income in the division declined 6.0% to $11.0 million. Much of the decline was attributed to the renegotiated contract with JCPenney, which pared the number of product categories MSLO would create for the retailer. Home Depot is also carrying fewer Martha-branded skus than it had a year ago.

Asked by an analyst whether MSLO can overachieve on its more modest royalty guarantees at JCPenney, cfo Ken West said it’s still too early to predict, and cited news reports about JCPenney’s struggle to recapture market share. “We’re doing our part,” he said, “and hoping they economically succeed and prosper.”

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