Martha Stewart Living beats street view by one cent per share

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Posted 1:23PM on Tuesday, April 23, 2002

NEW YORK - Martha Stewart Living Omnimedia Inc. on Tuesday beat the Wall Street estimate for first-quarter earnings by one cent, despite the bankruptcy at one of the company's major outlets, Kmart Corp. In the first quarter, Martha Stewart Living earned $2.9 million, or 6 cents a share, on revenue of $68.7 million. In the same quarter a year ago, it earned $6.2 million, or 13 cents a share, on revenue of $70.3 million. Ten analysts surveyed by Thomson Financial/First Call expected average earnings of 5 cents a share. Kmart, which sells Martha Stewart's Everyday line, declared bankruptcy in January, but received court approval last month to continue its licensing agreements and pay the $12.3 million it owed New York-based Martha Stewart Living. Merchandising revenue at Martha Stewart Living jumped 41.5 percent to $11.1 million, due primarily to a changed royalty agreement with Kmart. Under the August 2001 deal, royalties are computed on retail sales rather than inventory purchases, which pushed back revenue. First quarter publishing revenue fell 7.5 percent to $43.1 million, hurt by having one less special magazine issue compared with the same quarter a year ago. The latest quarter benefited from a 5.6 percent advertising rate increase, however. Television revenue was $6.7 million, up 4.2 percent on two new cable programs. First quarter Internet and direct commerce revenue fell 17.7 percent to $7.8 million, reflecting lower advertising revenue, lower catalog circulation and the impact of a fulfillment and call center transition. The company said Tuesday that it is comfortable with Thomson Financial/First Call average analyst estimates of 14 cents a share earnings for the second quarter and 53 cents for the full year. In 2001, the company earned 11 cents a share for the second quarter and 45 cents for the year. Martha Stewart Living said its outlook excludes the impact of any goodwill charges, as do the First Call estimates. Martha Stewart Living plans to implement in the second quarter new accounting methods that eliminate amortization of goodwill. Martha Stewart Living shares traded Tuesday afternoon at $18.69, up 4 cents, or 0.2 percent, on the New York Stock Exchange.