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Martha Stewart Loss Widens

May 01, 2003|From Reuters

Martha Stewart Living Omnimedia Inc. on Wednesday posted a wider first-quarter loss as advertising declined at its flagship magazine and as a federal probe hung over Chief Executive Martha Stewart.

Results were weaker than analysts and the company had expected. The company's shares fell sharply as management warned of further losses and Stewart said the insider trading scandal was still hurting the company she founded.

The company's first-quarter net loss widened to $4.51 million, or 9 cents a share, from a net loss of $234,000, or break-even on a per-share basis, a year earlier. Revenue fell 15% to $58 million.

First-quarter results also suffered from store closures at Kmart Corp., seller of some of Martha Stewart's best-performing product lines from bedsheets to gardening tools, the company said.

Stewart, who had said in March that the probe might be resolved soon, said she could not predict when her legal troubles would end. None of the questions asked by analysts were answered by Stewart.

The Securities and Exchange Commission is probing Stewart's sale of nearly 4,000 shares of ImClone Systems Inc. in December 2001, just before the stock tanked on disappointing news about an experimental cancer drug. The Justice Department also is investigating.

Martha Stewart stock fell $1.11, or 11.34%, to $8.68 on the New York Stock Exchange after posting its worst one-day percentage fall in six months. The stock is off 15% this year.

The company said it expected a second-quarter loss from continuing operations of 3 cents to 5 cents a share.

The company predicted a 20% plunge in publishing revenue in the current quarter with fewer ad pages and newsstand sales for Martha Stewart Living magazine, its top publication.

Television revenue, which slipped 1.4% in the first quarter, is expected to be between $6.5 million and $7 million in the current quarter.

Merchandising revenue, off 7% in the first quarter, is expected to be down 30% in the second quarter, reflecting recent sales trends and store closings at Kmart.

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