Martha Stewart Omnimedia Q1 loss widens


NEW YORK -- Martha Stewart Living Omnimedia Inc. said Thursday its first-quarter loss widened, weighed down by a charge associated with production of its syndicated TV program. The multimedia empire also announced that it signed an agreement with Costco Wholesale Corp. to sell a cobranded food line.

The New York-based company reported a loss of $11.87 million, or 23 cents per share, in the three months ended March 31. That compared with a loss of $6.84 million, or 13 cents per share, in the year-ago period.

Results included a $5.7 million, or 11 cent per share, non-cash compensation expense associated with the vesting of a portion of a warrant granted in connection with the production of the syndicated TV program "Martha Stewart Show." Excluding that expense, loss per share from continuing operations would have been 12 cents.

Two analysts surveyed by Thomson Financial expected, on average, a loss of 17 cents a share.

Revenue rose 7.4% to $66.7 million from $62.08 million, fueled by solid gains across its publishing, merchandising and Internet business.

"This quarter has been a very productive one in what is an important year for us as we continue pursuing our revenue streams and distribution channels," said Susan Lyne, president and CEO in a statement.

Stewart, the namesake founder, completed her prison sentence in March 2005 for lying to investigators about a stock sale. Since then, the company has stepped up a number of initiatives from magazines like Blue Print to developing branded homes with builder KB Home and photo products with Eastman Kodak Co.

This week, it launched its new Martha Stewart Crafts line of paper-based crafting and storage products exclusively in more than 900 Michael's Inc., the nation's largest arts and crafts retailer. Martha Stewart Living will be rolling out the line to independent dealers later in the year.

Last month, Martha Stewart Living -- which scaled back its Web operation as a catalog/e-commerce business in 2005 -- relaunched its Web site as an information portal. The site features more than 700 videos and provides a community where users can chat about such ideas as the latest recipe for chocolate cake.

The company's publishing division revenue rose 12% to $40.6 million, fueled by ongoing growth in advertising revenue. Advertising pages increased 7% at its flagship magazine Martha Stewart Living and 14% at Everyday Food, while total advertising revenue increased 20% in the quarter.

Merchandising division revenue grew to $13.6 million in the first quarter, compared to $11.5 million in the year-ago period.

The company's Internet business rose 20% to $3.5 million in the first quarter from $2.9 million in the year-ago period. And revenue in its broadcasting division fell to $9.0 million, from $11.3 million in the year-ago period.

For the current quarter, Martha Stewart projects an operating loss of $7.5 million to $9.5 million on revenue of $69 million to $72 million.

Martha Stewart Living said that for the full year 2007, it is maintaining its revenue guidance in the range of $330 million to $340 million. It is also increasing guidance for operating income by $4 million in the range of $9.5 million to $12.5 million.

The company did not provide any details about the food line for Costco.

Shares of Martha Stewart Living rose 24 cents, or 1.3%, to $18.51 in morning trading.