Martha Stewart Living Second-Quarter Loss Narrows
UPDATED: The company reports a swing to an operating profit in its broadcasting unit despite lower revenue, but warns that its return to overall profitability may be delayed.
Martha Stewart Living Omnimedia on Monday reported a narrower second-quarter loss as the sale of an investment and interest income boosted the bottom line.
But the company's loss from operations widened, and it signaled that its financial turnaround will be somewhat slower than previously predicted amid weakness in its publishing division. Management on a call said that advertising trends were weaker than previously thought, and the rebuilding of ad relationships would take time.
The lifestyle media company, which recently signed a new five-year contract with founder and chairman Martha Stewart, posted a quarterly loss of $2.7 million, compared with a loss of $2.9 million in the year-ago period. Revenue declined from $54.9 million to $47.9 million due to lower broadcasting and publishing revenue.
The company's broadcasting unit recorded an operating profit of $500,000, compared with a year-ago loss of $500,000. Revenue fell from $7.8 million to $4.6 million due to fewer new programs.
Merchandising financials improved.
"Led by solid performance in merchandising and broadcasting, MSLO's results were in line with our expectations for the quarter, CEO Lisa Gersh said. "We anticipated much of the weakness in publishing, and it's important to note that while our publishing strategy is gaining traction, it will take additional time to yield the targeted results. This will slow our planned return to profitability, but we continue to anticipate improving performance for the company in 2012."
On an earnings conference call, management reiterated that broadcasting unit financials are on track to break even during the second half of 2012.
As of mid-year, MSLO's studio lease and in-studio production has finished, with the final episode of The Martha Stewart Show on the Hallmark Channel set for Sept. 14, Gersh said. "We are excited about the opportunities to remake our video business," she said, reiterating the goal of running a profitable broadcast business that still serves as a megaphone for the company.
A progress report and new initiatives could be announced soon, she signaled. Gersh also touted the fall TV debut of Martha Stewart's Cooking School on PBS.
Gersh on Monday also reiterated that despite a lawsuit from Macy's, the company will launch a new merchandising deal with J.C. Penney during the first quarter of 2012 with a previously raised $288 million minimum guarantee, or $110 million more than the original target.
She said Macy's recent success at winning a preliminary injunction doesn't stop the first-quarter launch of a "wide array of products" in J.C. Penney stores early next year.
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