Martha Stewart's media empire cuts staff as losses mount
Shares of Martha Stewart Living Omnimedia (MSO), the beleaguered
media empire of the diva of domesticity, rallied today by 18 percent amidst reports that it had laid off about 100 members of its staff. The stock closed Friday at $3.87, a
52-week high, as investors' bet that
Martha Stewart Living will try to sell itself now that its balance sheet, following the cuts, will start to look a lot healthier.
Less than two months ago, the New York-based company hired corporate turnaround expert Daniel Dienst as its latest CEO, even though he had no background in media. The layoffs were designed to make Martha Stewart Living "leaner and more entrepreneurial," according to an anonymous source quoted by the Wall Street Journal. A company spokeswoman didn't immediately respond to a request for comment for this story.
Martha
Stewart Living, whose website currently features instructions on how to
make a toy duck from recycled cashmere, has been in freefall for years as
readership of its namesake magazines withered and her television
shows lost viewership and were ultimately canceled. The company has only been profitable in one of
the past 10 years. The New York Post, which broke news of the
layoffs, estimates company savings at about $10 million a
year.
The company, which is a tiny ant in an industry dominated by elephants, doesn't have an easy road ahead. During the most recent quarter, Martha Stewart Living posted a net loss of $4.3 million, or 6 cents a share, as revenue slumped more than 22% to $33.8 million. As of Sept. 30, it had cash and cash equivalents of $14.5 million. Martha Stewart Living has no debt, which as the domestic diva herself might say "is a good thing."
Martha Stewart is the company's non-executive chairman and top shareholder. She has reportedly feuded with her own executives, which may explain the high turnover in the executive ranks. Reality has begun to set in for Stewart, who had to take a pay cut herself last summer after investor complaints about her lavish compensation. Her namesake company slashed her base salary by $200,000 and cut the fee she received for being the face of the brand by $300,000 to $1.7 million.
The employees who lost their jobs in the midst of the holiday season will certainly have plenty of memories of Stewart. As the Post notes, many were seen carrying their belongings out the company's headquarters in Martha Stewart bags.