Martha Stewart Living to Significantly Cut Back DM Operations Amid Job Cuts

Martha Stewart Living Omnimedia will reduce the scope of its direct marketing operations, focusing primarily on its “how-to information for the home” through its Web site. It will additionally move its focus from personality-based experts to brand labels.

The announcement came on the same day that the New York-based firm announced a second quarter net loss of $19.3 million, compared with net income of $931,000 a year ago. The company’s revenue fell from $65.8 million to $44 million during the same period.

“By year end 2004, we will eliminate our direct commerce business,” said Sharon L. Patrick, the company’s president and CEO, referring to the firm’s Internet/Direct Commerce unit in a statement.

The other aspect of its DM operations that will be spared is its direct-to-consumer floral business, marthasflowers.

As part of its refocusing, the company will make some staff cutbacks. Part of these will come within its television division, as it has put its Martha Stewart Living program on hiatus. According to a published report, these cuts could amount to 5% of its 474 employees.

The Internet/Direct Commerce division generated $6.4 million in revenue during the second quarter, compared with $7.8 million a year ago. Much of the drop came from a decrease in catalog-related sales. The company trimmed its operating loss for the division from $4.6 million a year ago to $2.4 million, largely due to a reduction in catalog circulation and increases in its floral sales.

Patrick noted that the company has no debt and $158 million in cash reserves.