Daniel Dienst, the newly appointed CEO of Martha Stewart Living Omnimedia Inc. (MSO), has a reputation as a smart, no-nonsense guy with a lot of turnaround experience. He really will need at least one of those attributes to lead what has to be one of the dumbest companies around.
Dienst's turnaround experience is no doubt what got him the job. He has been a board member at Martha Stewart Living just since August, and he replaces former CEO Lisa Gersh, who quit last December after just five months on the job. He has long experience as an executive and turnaround specialist in the scrap metal business, which should do him not one bit of good at his new post.
Anyone taking bets on whether Dienst's reputation as a no-nonsense guy will help him out at his new job had better be giving long odds. Martha Stewart Living seems to run on nonsense. Take the deal the company tried to make with J.C. Penney Co. Inc. (JCP), thinking such a deal would not collide with an earlier deal Martha Stewart Living had made with Macy's Inc. (NYSE: M). Could no one read the contract with Macy's?
Dienst appears to be a sensible guy who is now in charge of a nonsensical company. The first thing he should do is get rid of all the perks the company offers to its doyenne. A turnaround at Martha Stewart Living needs to start at the top. But that will never happen. If Dienst tries it, he will join the list of Martha Stewart Living's former CEOs. The firm isn't a business, it is a personality cult, and if Dienst rejects that notion, he will be sorry. If instead he is blinded by the power of the cult, then nothing will change.
Shares of Martha Stewart Living closed at $2.40 Monday, in a 52-week range of $2.20 to $3.10. Shares went public in late 1999 at more than $35 but have not traded above $10 in at least five years. They have not traded above $5 in more than two years.