Martha Stewart needs to serve up a neat response

Responses to questions have damaged her image

July 05, 2002|By Abigail Goldman | Abigail Goldman,SPECIAL TO THE SUN

Her detractors say there are better cooks, more creative party planners, greater gardeners and warmer hostesses. But what Martha Stewart has on all of them is a formidable combination of talents: a brilliant understanding of modern consumers and an almost unparalleled ability to sell herself to them.

But in what is shaping up to be the biggest crisis of her career - allegations of insider stock trading and obstruction of justice regarding her sale of ImClone Systems Inc. stock - the domestic grande dame is decidedly off her game.

Stewart has been able to deflect criticism and unflattering portraits with an aggressive response, or with humor. When all else failed, she let the sheer volume of Martha Stewart TV shows, magazines, books and products do the talking for her.

This time around, however, Stewart has been defiant, defensive and mostly unavailable.

That strategy could backfire on someone as public as Stewart, especially if the inquiry is prolonged and Stewart is seen by Wall Street as distracted, or by the public as having something to hide.

"One of the consequences of being a product of the media [is that] the media can be negative as well as positive, and it can be difficult to manage," said David Stewart, a consumer psychologist and professor or marketing at the University of Southern California's Marshall School of Business. (He is not related to Martha Stewart.) "This isn't just a gossip column item, this is national news, and it's much more difficult to manage the spin on that."

It is a level of scrutiny unfamiliar to Stewart, who is battle-tested but more accustomed to fighting tell-all books and media reports suggesting that her real-life behavior is not as gracious as her public persona.

In those cases - including allegations of bad blood with her Connecticut neighbors and shabby treatment of previous business partners - Stewart has jabbed back, rallying her many female fans with the contention that she is more scrutinized and held to a different standard than are male business leaders, who are given credit for making aggressive business moves and demanding quality work from employees.

In response to caricatures depicting outlandishly difficult and trivial craft projects, Stewart responded with an appearance in an American Express commercial, in which she retiled a swimming pool with cut-up pieces of old credit cards.

But in the current crisis, Stewart is more hampered, business experts say.

Part of her reticence to speak about the issue likely comes from her lawyers, since most legal experts routinely advise clients to avoid commenting on pending investigations.

Compounding the issues, the allegations center on exactly those parts of her life that Stewart downplays with fans of her domestic skills - a constant, public discussion of her financial acumen as a former stockbroker, the leader of a public company and board member of the New York Stock Exchange.

This week, in an apparent effort to do damage control, Stewart's company, Martha Stewart Living Omnimedia Inc., hired the Brunswick Group, a public relations strategist firm.

Still, say experts in crisis communications, Stewart could have acted more quickly to reassure the public about her integrity, especially at a time of unprecedented scrutiny of the actions of business leaders.

"It looks like a classic case of not believing it's as bad as it is," said Dan McGinn of the McGinn Group, which handles crisis public relations. "Any question about her ethics is a fundamental challenge to the overall viability of the organization, and you've got to take it seriously."

Since news broke last month of her sale of shares in ImClone Systems Inc., Stewart has issued one formal statement describing how she came to sell her ImClone holdings and, during a few public appearances, reiterated that she did nothing wrong. One of her few, scant public comments about the ImClone scandal came last week during her regular CBS morning news spot, when Stewart brushed off questions while vigorously chopping a cabbage, calling the issue "ridiculousness."

Since news of the investigation broke last month, shares in Martha Stewart Living Omnimedia have fallen by as much as half, though they have recovered a bit of the lost ground.

Investors have worried about backlash as the scandal continues to swirl in high-profile venues.

What's more, Wall Street has long worried about what would happen to her company when the day came that Stewart was no longer able to run it. But that concern usually involved Stewart's physical health, not her glistening image, and the thought was that eventually, the company would use Stewart's image to move beyond Stewart herself. Some are questioning that notion more now.

"She stands for perfection," said Jennifer Aaker, an associate professor of marketing at the Stanford University Graduate School of Business. "The downside of standing for perfection is: one, the greater desire for people to tear one down - you become a person that people love to hate - and two, the potential of not being perfect."

Abigail Goldman is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.

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