New York, NY, Nov. 15--The insider trading scandal engulfing Martha Stewart is hurting nearly every aspect of business at her namesake company, according to the firm.
Martha Stewart Living Omnimedia said in a regulatory filing that investigation of Stewart's sale of stock in ImClone Systems is hurting advertising revenues for the flagship Martha Stewart Living magazine and television show, causing lower response rates for the company's direct mail business, and making it more difficult to find new business partners.
"We cannot currently predict with any certainty the extent of the impact these investigations will continue to have on our business," the company said in its 10-Q filing with the Securities and Exchange Commission.
"We cannot currently predict with any certainty the extent of the impact these investigations will continue to have on our business," a company statement said.
The only sizable segment of Martha Stewart Living's business that has not been hurt by the scandal is its retail business at Kmart, which sells the Martha Stewart Everyday line of housewares. But because of Kmart's bankruptcy and declining sales, Martha Stewart Living said it expects "royalties earned under our agreement with Kmart to be at approximately the minimum contractual amount for the full year 2002."
A Kmart spokesman indicated that the retailer's holiday television commercials for the Martha Stewart line will feature a voice over by Stewart, but the home style guru will not be seen in the ads.
Martha Stewart Living said in its 10-Q that Stewart's legal problems may make it difficult to find distribution for her television show for the season that begins in September, 2003. A lucrative annual holiday TV special has already been canceled.
