May 01, 2003|By BLOOMBERG NEWS
NEW YORK - Martha Stewart Living Omnimedia Inc. had a second straight quarterly net loss and said it will be unprofitable again this period as a federal probe of alleged insider trading by its founder discourages advertisers.
The company said yesterday that its first-quarter net loss widened to $4.51 million, or 9 cents a share, from $234,000, or break even, a year earlier. Sales fell 15 percent to $58 million from $68 million, the biggest decline since the company sold shares to the public in 1999.
Its image has been tarnished by questions over what chief executive Martha Stewart knew when she sold shares of biotechnology company ImClone Systems Inc. in 2001. The publishing unit's sales fell 21 percent in the quarter as advertisers avoided the pages of the company's flagship magazine, Martha Stewart Living.
"Advertisers are saying they don't want to be involved until this thing is cleared up," said Dennis McAlpine, founder of independent research company McAlpine Associates.
The company forecast a loss from continuing operations of 3 cents to 5 cents a share in the second quarter. It had been expected to have profit of 5 cents.
The New York-based company's second-quarter sales will fall 20 percent from $78.6 million in the 2002 second quarter, Chief Financial Officer James Follo said in a conference call with investors and analysts.
Omnimedia's shares fell $1.11, or 11.3 percent, to $8.68 on the New York Stock Exchange yesterday. They have declined by nearly one-half since news of the probe became public in June.
"I was hopeful my personal and legal situation would be resolved in the near future," Stewart said on the conference call. "Obviously, that has not happened, and I cannot make a prediction when it will."
Revenue dropped at all of the company's units in the first quarter. Sales fell to $34.1 million from $43.1 million in publishing, the company's biggest unit, because of lower advertising and circulation revenue at Martha Stewart Living magazine.
Ad sales at the publication declined 19 percent, according to Publishers Information Bureau.
