Shaw Awaits Impact of Stewart Conviction

Chattanooga, TN, Mar. 6--Martha Stewart may have been convicted of federal crimes Friday in New York, but the shock waves reached the Dalton, GA headquarters of Shaw Industries, according to a story written by Bob Gary Jr., of the Chattanooga Times/Free Press. "I'm sure this will be a topic for discussion on Monday," said Julius Shaw, an executive vice president at Shaw, which makes Martha Stewart Signature Flooring. Stewart came to Dalton in April 2002 to announce the line's launch. Bob Shaw, chairman and CEO of the company that bears his family name, called the partnership "a game-changer" for the industry. Two months later, stories surfaced alleging that Stewart had improperly sold ImClone Systems stock in late 2001. The sale took place one day before an ImClone cancer drug was rejected by federal officials, after which the company's stock plummeted. One year later, in June 2003, Stewart was indicted on federal charges including securities fraud, conspiracy, obstruction of justice and making false statements. She plead innocent and went on trial in February. The securities fraud charge was dismissed during the trial, but Stewart was convicted on the other counts. She faces a prison sentence but plans to appeal, according to her Website. Her sentencing is set for June 17. Scott Sandlin, Shaw's vice president for product and brand marketing, said in January 2003 that the Stewart line was in about half the anticipated number of retail outlets. Sales goals, which were "north of $100 million," had been pushed back, he said. Julius Shaw said sales expectations for the Stewart line "never materialized" once "this issue came up." Frank O'Neill, publisher of Pound Ridge, NY-based Floor Focus magazine, paraphrased the catch phrase that is perhaps Stewart's most familiar. "It's not a good thing," he said, "but I don't think it will hurt Shaw Industries too seriously. The whole thing is a very small part of Shaw's business." O'Neill said it's too early to determine whether the Stewart line will survive in its current form. Moreover, he said, there's no precedent in the carpet industry. "The industry has used big names before--Mohawk uses Ralph Lauren, for instance--but we've never seen anybody have this kind of trouble before," he said.

Print the Article