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Martha Stewart Living Omnimedia Inc. (NYSE: MSO)
11 West 42 Street, New York, NY 10036
Chairman and CEO: Martha Stewart
Revenues (FYE December 31, 1999): $232.3 million
Net income (FYE December 31, 1999): 25.6 million
Market Capitalization: $1,165.69 million
Employees: 385
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Business New Haven
4/3/2000
By: Kristine Hansen
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Who'd have predicted that Connecticut's own little Martha Stewart had what it took to turn domesticity into a phenomenon?
While the first New Englanders may viewed household duties as essential to survival, domestic drudgery is now viewed by many of this generation as an art - something to validate one's self-worth. Even the company's public relations package for Martha Stewart Living Omnimedia Inc. exhibits her singular “touch”: The folder, fronted with attractive pictures of the “good life,” is bound with a perfectly tied satiny ribbon. It's just so Martha.
The recipe for her success was developed and perfected over decades. After working her way through college, New Jersey native Stewart landed a job as a stockbroker, leaving a few years later to start her own catering business. Following her first book, Entertaining, published in 1982, came several others, as well as a newspaper column, radio and TV programs, mail-order business, magazines and a Web site which today comprise a horizontally integrated business empire built on four legs: publishing, television, merchandising and Internet/direct commerce.
The publishing segment includes an books and magazines, including Martha Stewart Entertaining, Martha Stewart Living and the syndicated column, Ask Martha. The television division includes the Emmy award-winning Martha Stewart Living, the cable show From Martha's Kitchen and coast-to-coast radio with Ask Martha.
Through the company's merchandising segment, certain branded products are sold exclusively in K mart and Zellers (Canada), while additional branded products retail in a variety of stores including Sears, Sherwin-Willliams and Jo-Ann Fabrics. Merchandising extends to mail order through Martha By Mail and on the Internet at marthastewart.com.
Martha Stewart Omnimedia's enterprises are profitable although the real growth in the company took off in 1997. At that time the then-privately held, Martha Stewart Living Omnimedia LLC, acquired from Time Publishing Ventures assets and liabilities related to the magazines Martha Stewart Living and Martha Stewart Weddings, the Martha Stewart television program, Martha by Mail, trademarks and copyrights.
The company's revenues skyrocketed in 1997 to $132.8 million from just $3.9 million in 1996. Revenues blossomed further to $180 million for 1998 and to $232.3 million last year. Net income has also been on the upswing with 1997 net income at $13.9 million, 1998 income at $23.8 million (26 cents per diluted share) and 1999 net income of $25.6 million (24 cents per share diluted share). Profit margins have exceeded ten percent for each of the past three years.
By 1999 it looked as though Martha Stewart Living Omnimedia LLC had it all - strong brand identity, diversified product lines, customers, profitability and awards. So with a bottom line like that, why go public in 1999?
The company planned to allocate a portion of proceeds from the IPO to repurchase shares of Class A common stock held by Time Inc., a subsidiary of Time Warner Inc. The company has since announced it would repurchase 1.366 million shares from Time for $32.5 millio
The IPO created a publicly traded Class A common stock with one vote per share and approximately 15 million shares outstanding. The initial offering price for the stock was $18 last October. It closed on March 21 at 23 1/2, up 3/16. Earnings estimates for the first quarter of this year are two cents per share and for the fiscal year ending next December of 11 cents per share. Analysts currently agree on a buy/strong buy, although earnings estimates for 2000 are down to 11 cents a share - less than half of the actual 1999 figure.
Following the IPO, control of the company still remains with Martha Stewart herself through her control of all of the outstanding shares of Class B stock (about 34 million shares), giving her ten votes per share and 96 percent of the voting power. The company is dependent on one brand name - Martha Stewart - and its alliances with outside parties. Growth of the company has also coincided with years of economic prosperity and a hot housing market in the U.S.
The cultivation of new alliances continues. Last year the company signed with an affiliate of Kleiner Perkins for further development of the Martha by Mail and the Internet business. Leveraging Internet opportunities is front-burner for the company. It also recently acquired a five-percent equity stake in BlueLight.com. Martha Stewart Omnimedia will begin to merchandise products on that site this fall in addition to its own site.
Recently introduced were the new Martha Stewart Baby magazine and the Martha Stewart Everyday Garden line of seeds and live plants. Also planned is the introduction of the Martha Stewart Everyday Housewares program.
Things are really cooking at Martha Stewart Living, where baking the bread has led to making real dough.
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