LIVE FROM THE HEADLINES
Aired August 11, 2003 - 19:22 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
MARTHA STEWART: A beautiful lined envelope like this is a little detail that hints at all the great things to come for your wedding day. It is a good thing. Thanks very much.
(END VIDEO CLIP)
ANDERSON COOPER, CNN ANCHOR: It is a good thing. That's a little bit of TV news style irony for you. See, things were definitely not good for Martha Stewart today, as Greg Clarkin reports now. Her company posted its second quarter earnings, not a good thing.
GREG CLARKIN, CNN CORRESPONDENT (voice-over): Scenes like these have been a bummer for buyers of Martha's stock. Watching the lifestyle queen dodge the press at the courthouse has taken a toll on the company Stewart founded. The insider trading scandal contributed to an 86 percent plunge in profits in "Martha Stewart Living Omnimedia" last quarter.
In al fairness, the company posted two cents a share in earning and that is better than Wall Street expected. But make no mistake about it, the brand is bruised. New CEO, Sharon Patrick, said as much. In a statement, Patrick said: "We believe that the "Martha Stewart Living" core brand will be under pressure until resolution of Martha Stewart's personal legal situation." The reason is simple. Build a brand around a personality, and it is going to rise and fall accordingly.
ROBERT PASSINOFF, BRAND KEYS: Folks that were advertising "Martha Stewart Living" don't need "Martha Stewart Living". They can go over to magazines like "O" or "Real Simple" and reach the same audiences that they were getting with Martha Stewart without being tainted.
CLARKIN: And they did. The publishing business with its flagship "Martha Stewart Living" magazine had a 16 percent drop in sales. The company said losses for the year will be twice as bad as expected. The dismal outlook, coupled with Stewart's January trial, will keep the pressure on the bottom line.
PASSINOFF: In the short term the company just needs to keep things very quiet. Quiet is good. Keep Stewart out of the limelight, whether it is marketing or it is just publicity. You just don't want her associated with the company.
CLARKIN (on camera): As for the long-term, well, that really hinges on the outcome of the Stewart trial. If it is a guilty verdict, the feeling is it will take quite some time to rebuild the Martha Stewart brand.
Greg Clarkin, CNN, New York.
COOPER: We're joined now by Chris Byron, the author of "Martha Inc." Want to talk about her future and the future of the company. Chris, thanks for being with us.
CHRIS BYRON, "MARTHA INC.": My pleasure, thank you.
COOPER: Do you think Martha has a good grasp of what is going on in her own company at this point?
BYRON: No I really don't. I think that she's -- I worry she's disconnected from what is actually happening here. This stock has taken a pounding for an entire year. And it is likely...
COOPER: An 86 percent plunge in profits.
BYRON: The message from the market is, we don't want the product when it is so closely identified with somebody in serious legal problems. And I don't think she gets that. She's insisted her innocence from day one on this thing.
COOPER: But, given integration of herself with the product and with the company, is there anything for her to get? Is there any way for her to disassociate herself completely from...
BYRON: There is a real tragedy unfolding here, because the brand that this company sells is Martha Stewart herself. And for a long time that image has not been the real Martha Stewart, but she's marketed herself as being that final expression of American woman perfectionist.
COOPER: You say it is not the real Martha Stewart because - I mean, it is an impossible thing to live up to.
BYRON: Exactly. And Martha Stewart is a real person with great qualities and flaws and, like all of us, a work in progress. Martha Stewart the brand is not a work in progress, it is a finished job, it is perfection, and...
COOPER: So is it as the CEO of the company just said, as long as legal problems continue, it is going to be a tough time for the company or that...
BYRON: I think it is different than that actually. I think that the company's future is getting darker every day, no matter what happens with the legal problems, because she has been so severely damaged by them now, it is hard to see what happens if you take Martha out of the picture or clear her name. As your
COOPER: You think the damage is permanent?
BYRON: Yes, I do. I don't see how you get this stain off of the name.
COOPER: All right. We will have to wait and see. Chris Byron, thanks very much.
BYRON: Thank you.
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