Martha Stewart Living Omnimedia's Q3 net loss narrows to US$4.3M from loss of US$50.9M in year-ago period, where 2012 results included a US$44.3M impairment charge; net sales down 22.3% to US$33.8M with lower Publishing, Broadcasting revenues

Kendall Sinclair

Kendall Sinclair

Oct 29, 2013 – PR Newswire

NEW YORK , October 29, 2013 (press release) – Martha Stewart Living Omnimedia, Inc. (MSO) today announced its results for the third quarter ended September 30, 2013. The Company reported revenue for the third quarter of $33.8 million.

Ken West, Executive Vice President and Chief Financial Officer said, "Third quarter results reflect solid growth in Merchandising offset by lower Publishing revenues. In Publishing, we've taken strategic steps to refocus our operations around our Martha Stewart Living and Martha Stewart Weddings titles as well as our digital properties. The print titles continue to perform favorably in their competitive sets and have seen positive traction in advertising sales year-to-date, despite broader industry pressures. Merchandising generated improved operating income of 11%. Our recently announced revised agreement with J.C. Penney assures the availability of Martha-branded products in targeted categories at J.C. Penney stores and online. These recent developments are encouraging, but we have much more work ahead. Our primary objective remains driving sustainable performance improvement at MSLO over the long-term by capitalizing on the strong engagement that our brands have with consumers across our media platforms and at retail. We welcome our newly appointed CEO, Dan Dienst, who brings a strong operating background and financial discipline to the Company, as we intensify our efforts to reposition the Company for profitability."

Third Quarter 2013 Summary

Total revenues were $33.8 million in the third quarter of 2013, compared to $43.5 million in the third quarter of 2012 as growth in Merchandising revenues was offset by lower revenues from Publishing and Broadcasting, which reflect the Company's strategic decisions last year to end the publication of two print titles and exit live television programming production.
Total operating loss for the third quarter of 2013 was $(4.1) million compared with a loss of $(50.7) million in the prior-year period. Total operating loss for the third quarter of 2012 included a $(44.3) million non-cash impairment charge reflecting the write-down of goodwill related to the Company's publishing segment.

Basic and diluted net loss per share was $(0.06) for the third quarter of 2013, compared to a loss of $(0.76) for the third quarter of 2012.

Third Quarter 2013 Results by Segment

Three Months Ended, September 30

(unaudited, in thousands)

         
         
 

2013

 

2012

 

REVENUES

       

Publishing

$         19,401

 

$        27,572

 

Merchandising

14,153

 

13,233

 

Broadcasting

294

 

2,744

 

Total Revenues

$         33,848

 

$        43,549

 

 

OPERATING (LOSS) / INCOME

       

Publishing

$        (6,260)

 

$      (51,264)

 

Merchandising

9,479

 

8,525

 

Broadcasting

(214)

 

281

 

Corporate

(7,081)

 

(8,231)

 

Total Operating Loss

$        (4,076)

   

$      (50,689)

 
                   

Recent Business Highlights

MSLO continues to engage consumers via social media, demonstrated by more than 8.1 million fans and followers across all social media, a 239% growth in followers on Pinterest in the last year and 1.5 million page views for the #bestsummerever campaign. MSLO also recently launched #MarthaToTheRescue, where Martha responds to tweets addressed to her via Vine and Instagram Videos.

MSLO won a min Integrated Marketing Award for Most Creative Use of New Technology for "Pinspiration" with Martha Stewart, and was a finalist in five other categories.

Martha Stewart Essentials, a new line of six supplements created specifically for women, which have been produced in partnership with nutritional supplement developer Inergetics, launched in Walgreen stores nationwide in September.

In the quarter, MSLO published its 80th and 81st books, Martha Stewart's Favorite Crafts for Kids and Martha Stewart's Cakes.

In October, the Company held its second annual "American Made" program, where makers, doers and creative entrepreneurs from across the country gathered in New York City for networking sessions and panels celebrating the spirit of innovation.

Showcasing his line of professional kitchenware, food and cutlery products, Emeril Lagasse returned to QVC on October 16 during the "Emeril's Kitchen" broadcast with additional shows scheduled for December, January and February plus well into the spring.

Publishing

Revenues in the third quarter of 2013 were $19.4 million, compared to $27.6 million in the prior year's third quarter. The comparison reflects the impact of the Publishing restructuring, which included the transition of Everyday Food from print to a digital brand, the closing of Whole Living, and a reduction in the number of issues of Martha Stewart Living published annually. In the 2013 third quarter, MSLO published two issues of Martha Stewart Living, compared with three in the year-ago period. The two issues published generated improved advertising sales compared with the same year-ago issues.

Operating loss was $(6.3) million for the third quarter of 2013, compared to $(51.3) million in the prior year, which included a $(44.3) million non-cash impairment charge reflecting the write-down of goodwill.

Merchandising

Revenues increased 7% to $14.2 million for the third quarter of 2013, as compared to $13.2 million in the prior year's third quarter, benefitting from royalty revenue recognition from the Company's relationship with J.C. Penney.

Operating income was $9.5 million for the third quarter of 2013 as compared to $8.5 million in the third quarter of 2012.

Broadcasting

Revenue in the third quarter of 2013 was $0.3 million, compared to $2.7 million in the third quarter of 2012, reflecting the Company's exit from live television programming production last year.

Operating loss was $(0.2) million for the third quarter of 2013 compared to operating income of $0.3 million in the third quarter of 2012.

Corporate

Corporate expenses were $(7.1) million in the third quarter of 2013 compared to $(8.2) million in the prior year's quarter, due to lower executive compensation and reduced legal expenses in the 2013 period.

The Company will host a conference call with analysts and investors on October 29, 2013 at 8:30am EDT that will be broadcast live over the Internet at www.marthastewart.com/ir, and an archived version will be available through November 12, 2013.

About Martha Stewart Living Omnimedia, Inc.

Martha Stewart Living Omnimedia, Inc. (MSLO) is a leading provider of original "how-to" information, inspiring and engaging consumers with unique lifestyle content and high-quality products. MSLO is organized into the following business segments: Publishing, Merchandising and Broadcasting. MSLO is listed on the New York Stock Exchange under the ticker symbol MSO.

Martha Stewart Living Omnimedia, Inc.

         

Consolidated Statements of Operations

         

Three Months Ended September 30,

         

(unaudited, in thousands, except share and per share amounts)

         
                   
                   

REVENUES

 

2013

 

2012

         
                   

Publishing

 

$            19,401

 

$            27,572

         

Merchandising

 

14,153

 

13,233

         

Broadcasting

 

294

 

2,744

         

Total revenues

 

33,848

 

43,549

         
                   

Production, distribution and editorial

 

(16,579)

 

(24,487)

         

Selling and promotion

 

(10,401)

 

(13,028)

         

General and administrative

 

(10,097)

 

(10,972)

         

Depreciation and amortization

 

(847)

 

(1,003)

         

Restructuring charges

 

 

(491)

         

Goodwill impairment

 

 

(44,257)

         
                   

OPERATING LOSS

 

(4,076)

 

(50,689)

         
                   

Interest income, net

 

194

 

327

         

Other expense, net

 

(76)

 

(106)

         
                   

LOSS BEFORE INCOME TAXES

 

(3,958)

 

(50,468)

         
                   

Income tax provision

 

(337)

 

(410)

         
                   

NET LOSS

 

$            (4,295)

 

$          (50,878)

         
       

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