Today, Martha Stewart Living Omnimedia, Inc. announced that Lisa Gersh, president and CEO, is stepping down. In the leadership transition, the company stated, it plans to further its merchandising business expansion, in part, a spokesperson confirmed, by finding a Gersh successor with some retail and/or consumer product company experience.
The company said the search to find her successor already is underway. The announcement of Gersh’s resignation put concern about the consumer product element of the business, which MSLO designates as merchandising, on a par with the media side, which traditionally has dominated. Gersh has a television background. Prior to joining MSLO, she co-founded Oxygen Media, serving as its president and COO from 1998 until 2007 when NBC Universal acquired it. Following the acquisition, MSLO noted, Gersh served as NBC’s president/strategic initiatives. However, the merchandising part of MSLO’s business has become more significant lately as the company consolidated its magazine side and experienced the demise of its Hallmark Channel television show. In the meantime, the company has announced new and renewed deals with retailers such as J.C. Penney and Home Depot.
MSLO pointed to what it termed the successful restructuring and repositioning of the company’s publishing and broadcast divisions under Gersh, saying that profitability improved and delivery of its content through digital, mobile and video platforms expanded. The company said the restructuring should result in annualized cost savings of $45 million to $47 million, which would boost EBITDA by approximately $5 million to $7 million annually. In the third quarter ended September 30, MSLO reported total revenues of $43.5 million versus $52.2 million in the 2011 period. Operating loss was $50.7 million, including a $44.3 million non-cash good will impairment charge resulting from continued softness in the print publishing industry overall and, specifically, a decrease in the company’s advertising revenues, MSLO pointed out. Total operating loss in the third quarter was $9.3 million, which included a $3.8 million restructuring charge related to changes in executive management and professional fees.
While publishing and broadcast revenues decreased in the third quarter year over year, merchandising revenues increased to $13.2 million from $12.3 million.
MSLO said it is focused on building its higher-margin merchandising businesses by expanding into new product categories, adding new distribution partners and entering new international markets. The company added that fourth quarter merchandising revenue is expected to come in 15% higher than was the case in the same period last year with adjusted EBITDA margins of approximately 70%. In early 2013, the company stated, perhaps optimistically, it will begin to realize revenue and brand building benefits from its agreement with J.C. Penney, which was entered into in late 2011. Macy’s is challenging the Penney deal in court, contending that it’s own agreement with MSLO supersedes it.
Martha Stewart, MSLO founder and non-executive chairman, commented on the leadership change, saying, “Our media businesses are now repositioned for the future, and we are excited about the potential of our digital, mobile, video and print platforms. As one example, our digital business hit an all-time high of 8.3 million unique visitors in November. Building on this momentum, we are now increasing our capabilities in merchandising and plan to take full advantage of that opportunity for the benefit of our shareholders and all of our partners both at home and abroad.”