Thursday, July 30, 2009

Despite 2nd Quarter Loss, MSLO Looks to the Future

Martha Stewart Living Omnimedia (MSLO) reported second quarter results in an earnings conference call yesterday. While overall earnings for the quarter were down as compared to last year, the company is excited about the future with new partnerships in development and new products due to hit the store shelves in early in 2010.

Robin Marino, MSLO's President of merchandising, spoke about the new partnerships and prospects for the future:

"We continue to execute on our diversification strategy, focusing on new areas where we have strong brand equity and expertise, like weddings, cleaning products, food, and pets. Our weddings franchise is a great example of this. We started 15 years ago with our Martha Stewart Weddings magazine, which developed a passionate following and established us as the creative leader in this space.

The Martha Stewart collection of home products exclusively at Macy’s is the number one brand on Macy’s bridal registry. We further extended our weddings franchise with investments in wedding wire and

In May, we launched a line of co-branded social stationary products with Crane & Company, beginning with a beautiful assortment of wedding invitation suites.

And early this week, we announced an agreement to create branded destination weddings and crafts classes and camps at Sandals & Beaches Resorts throughout the Caribbean. We see a great amount of opportunity in the wedding space as we integrate all of these wonderful assets, and I look forward to keeping you posted on future calls.

The development of the Martha Stewart clean product line with Hain Celestial is complete. It encompasses 10 SKUs of all-natural cleaning products derived primarily from plants and minerals, including laundry detergent, liquid dish and hand soap, tub and tile cleaner, and more. We expect to have product on store shelves in early 2010. I am very excited about this entry into a completely new product category, a category where consumers have asked to find us. We look forward to updating you on our progress.

As I said on our last call, food is another important opportunity. We have tremendous brand equity in the space and valuable learnings from our relationship with Costco. We see great prospects for Martha Stewart food line and you can expect to hear more from us about new manufacturing partners in the months ahead.

Our pets franchise continues to gain traction with the launch last quarter of our pets channel on As I always say, media leads and merchandising follows. We expect to have news on a new partnership in this category very soon. Stay tuned.

While the near-term environment is challenging, we feel very good about our merchandising strategy, our terrific partners, and our future prospects. New and expanded business opportunities, including plans for a new, large scale retail partnership, are well underway. We look forward to sharing more about them with you in the second half of the year as we position ourselves for 2010 and beyond. "

The question remains, who will be the next large scale retail partnership? We should know the answer to that question in the next few months as we say, 'goodbye' to Kmart.


mike said...

Thanks or posting this Kenn - I was waiting with baited breath (freshly-brushed), for the "announcement".... oh well. "Good Things" come to those who wait.

Elaine said...

I sure hope their diversity strategy works.

Thanks for the information, Kenn.

Sarah said...

It made it sound like they aren't partnering with Costco anymore. Is that true?

Kenn said...

Hi Elaine,
In everything that I've read and what I understand regarding the diversity strategy, MSLO doesn't want to become so dependent on ONE retailer for revenue, as they were for years with Kmart. When Kmart when into 'flux' several years ago, it had a big impact on the sales of MSE merchandise. With limited stores (after closing hundreds)selling the merchandise, they were automatically in a losing situation. As you diversify, if a retailer 'goes under' for any reason or faces any sort of scandal that would impact consumer perceptions, you would at least have others to rely on for your revenue stream.

The true benefit to consumers is great availability of branded items. The risk.. is over saturation. But, it seems as though MSLO creates partnerships at a slower more deliberate rate to avoid this.

Kenn said...

Hi Sarah,
The Costco relationship as we know it is indeed going to end. (I believe it's slated to end at the end of the year). The Kirkland - Martha Stewart line will eventually end. That being said, Costco would certainly have the option to carry the new food items as they are released.

The agreement with Costco was a relatively short term contract. There were some difficulties in food production that MSLO officials have said those difficulties were 'great learnings' that they will take forward with a new food program.

Don't fret! My impressions from listening to the conference calls and from other written material I've read, the new food line, when developed will be available in a more mass market environment, meaning you're likely to find it at your local supermarket! That's a good thing!

Kenn said...

Hi Mike,
I think we've all been awaiting the announcement!

Kmart is clearly liquidating the inventory with the contract winding down and ending in January 2010. What I think is interesting, is I've not heard the term "mass market" retailer used when referring to a successor to Kmart... instead, it leads me to believe that it may be a mid level retailer perhaps something like Target or Kohls. We'll have to wait and see!

While I expected the news to be released during this conference call, I'm thinking now it will be the next quarter when we hear something. I can't imagine they would wait until the very end of the year. In the call previous to this one, it was referenced that the transition would be 'seamless' which leads me to believe that production and work has already started.