Martha Stewart Turnaround Fails

24/7 Wall St.

Martha Stewart Living Omnimedia Inc. (MSO) reported first-quarter 2014 results before markets opened Tuesday. The lifestyle company reported a diluted earnings per share (EPS) loss of $0.05 on revenues of $33.3 million. In the first quarter a year ago the company posted a net loss of $0.05 per share on revenues of $37.2 million. The consensus estimates from Thomson Reuters called for a net loss of $0.06 per share on revenues of $37.5 million.

Daniel Dienst joined the Martha Stewart machine's board last August and was named CEO in October. His background is in the scrap metal business, which is about as far from the Martha Stewart cult as it is possible to be. He got the job on the strength of his turnaround abilities, but so far it has been tough going.

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The company has made virtually no progress in the past year. The loss per share is the same as first quarter a year ago and revenues are down about 10% as the Martha Stewart brand weakens in both publishing and broadcasting. Publishing revenues are down 20% year-over-year, and the division's losses grew to $2.8 million for the quarter, up from $1 million last year.

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Broadcasting revenue tumbled 45% to $678,000 due to "non-recurring revenue components in the prior year related to our historical Broadcasting operations." We are not sure what that means, but we can easily see the impact.

Dienst had this to say:

First quarter results reflect the current transition underway at the Company as we start to benefit from the significant changes we made at the end of 2013 to realign our business. We still have work to do but are encouraged by the early results of these decisions. Our efforts in 2014 are now keenly focused on growing our business across all verticals and with existing and new partners. As a company of ideas and inspirations, we are excited about the future growth for our peerless brand.

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This is happy talk, not a turnaround plan. If this is the best this company can do, then it is doomed.

Shares were down about 2.7% at $4.00 in the first half-hour of trading Tuesday. The stock's 52-week range is $2.20 to $5.50, and the consensus price target on the stock is $5.40.

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