NEW YORK (AP) — The insider trading investigation surrounding Martha Stewart is taking a toll on her namesake company, which reported its first-ever quarterly loss Tuesday and warned of more bad news ahead.
For the three months ending Dec. 31, Martha Stewart Living Omnimedia lost $2 million, or 3 cents per share, in contrast to a profit of $5.7 million, or 13 cents per share, in 2001. The results marked the first time the company has reported a net loss for any quarter since it went public in 1999.
Among the fallout at the media and retailing company: an expected 25 percent decline in advertising pages at the company’s flagship Martha Stewart Living magazine during the first three months of this year.
“Certain advertisers are opting to wait until they see the resolution of the investigations involving Martha before committing to run pages,” company president and chief operating officer Sharon Patrick said Tuesday.
The company earned 6 cents per share in the fourth quarter, putting it ahead of the 3 cents per share that analysts surveyed by Thomson First Call had forecast. But it warned of more difficulties ahead, saying it expects a first-quarter loss of 6 cents to 8 cents per share, when analysts were looking for a profit of 3 cents. Fourth-quarter revenues were $77.6 million, compared with $82.7 million in 2001.
While the downturn was driven by declines in publishing, television and Internet/direct commerce divisions, merchandising revenues were higher, increasing 11 percent to $11.8 million in the quarter. The company said it benefited from strong demand for a new holiday line and higher royalty rate under its contract with Kmart.
Federal regulators want to know whether founder and chief executive Martha Stewart was trading on insider information when she sold shares of ImClone stock in December 2001. She has denied any wrongdoing, but said the issue continues to hurt business.