Drop In J.C. Penney Sales Negatively Impacts Martha Stewart Q3 Revenue

Third quarter revenue at Martha Stewart Living Omnimedia (MSLO) was down due in part to lower royalty revenue from licensed product sales at J.C. Penney.

For the quarter ending Sept. 30, revenues totaled $29.8 million compared to $33.8 million in the third quarter of 2013. In addition to the dip in J.C. Penney revenue, MSLO was also negatively impacted by lower print and merchandising revenue that was partially offset by higher digital advertising revenue.

Earlier in October, MSLO announced a 10-year partnership with Meredith Corporation whereby Meredith will lead the advertising sales, circulation, production and other non-editorial functions of Martha Stewart Living and Martha Stewart Weddings magazines as well as www.marthastewart.com, and www.marthastewartweddings.com.

“Results for the third quarter, which is seasonally our weakest quarter of the year, were in line with expectations but do not reflect the current transformation taking place at MSLO,” said Dan Dienst, company CEO. “The significant partnership we recently announced with Meredith Corporation allows us to leverage their scale and expertise to fully monetize our award-winning content.”

Merchandising revenues in the third quarter were $13.7 million compared to $14.2 million in the prior year’s third quarter primarily due to lower royalty revenue received from J.C. Penney reflecting fewer licensed categories at J.C. Penney.

Operating loss was -$1.5 million for the third quarter of 2014 compared to operating income of $9.5 million in the third quarter of 2013. The decline was due to the $11.4 million non-cash impairment charge reflecting the write-down of the Emeril trademark and goodwill.  Excluding this non-cash impairment charge, operating income for the third quarter of 2014 reflects an increase in operating income of $9.9 million.