Charles Koppelman, Executive Chairman and Principal Executive Officer, said, "MSLO is executing its business plan well in a tough economic environment. That is evidenced by 28% growth in Internet advertising revenue in the quarter compared to the same period last year as marketers respond to our popular online properties. Meanwhile, the operating efficiencies we have implemented over the past several quarters contributed to bottom line performance, as did higher profits from our Broadcasting segment. These factors helped to offset expected weakness in print advertising and lower merchandising revenue primarily due to the wind down of our Kmart relationship. Overall, we believe that MSLO is well-positioned with our core audiences. We look forward to demonstrating the growing power of our brands as the economy improves and as we position our Merchandising business for 2010 and beyond with new partners and new products."
Robin Marino, President and Chief Executive Officer of Merchandising, stated: "Although Merchandising is not immune to the challenging retail environment, we continue to execute on our diversification strategy. Earlier this week, we announced an agreement to create branded destination weddings as well as crafts classes and crafts camps at Sandals and Beaches resorts throughout the Caribbean. This initiative further extends our well-established and growing presence in the Weddings category. We've finalized the development of our Martha Stewart Clean products with The Hain Celestial Group and look forward to introducing these all-natural cleaning solutions in early 2010. Other than the expected lower revenue from Kmart, sales at Macy's and other merchandising partnerships remained relatively resilient in a difficult economy."
Second Quarter 2009 Summary
Revenues were $57.0 million in the second quarter of 2009, compared to $77.1 million in the second quarter of 2008. Lower revenues primarily reflect declines in magazine advertising revenue during a challenging period for the publishing industry, as well as lower merchandising revenues compared with the same period last year largely due to the winding down of our Kmart relationship. The Company's Internet and Broadcasting segments witnessed solid performance during the quarter.
Operating loss for the second quarter of 2009 was $(6.1) million, compared to operating income of $1.7 million for the second quarter of 2008. Included in the results is an impairment charge of $(5.5) million related to an equity investment. When the impairment charge recorded in the quarter is excluded, operating loss was $(0.6) million for the quarter.
Adjusted EBITDA for the second quarter of 2009 was $2.8 million, compared to $5.3 million in the prior year period. Cost savings initiatives implemented in prior periods helped offset lower revenue levels in the quarter.
Net loss per share was $(0.12) for the second quarter of 2009, compared to net income per share of $0.01 for the second quarter of 2008. Included in the results is an impairment charge of $(5.5) million or $(0.10) per share for the quarter related to an equity investment. When excluding the impairment charge recorded in the quarter, net loss per share was $(0.02) for the quarter.
prior year's second quarter, due to lower production and staffing expenses in the quarter.
Highlights
- The Martha Stewart Show was nominated for four daytime Emmy Awards. The show's fifth season gets underway on September 14.
- Production for the second season of Whatever, Martha! on Fine Living Network is nearly complete; the new season will premiere on September 23.
- Emeril Green began its second season on Discovery's Planet Green network on April 20.
Internet
Revenues were $4.2 million in the second quarter of 2009, up from $3.2 million in the second quarter of 2008.
Operating loss was $(0.5) million in the second quarter of 2009, compared to $(2.0) million in the second quarter of 2008.
Adjusted EBITDA was $0.1 million in the second quarter of 2009, up from a loss of $(1.4) million in the second quarter of 2008, due to increased ad revenue coupled with continued expense management.
Highlights
- Digital advertising revenue increased 28% compared to the prior year's quarter.
- Page views increased 59% over the prior year's quarter.
- The recent launch of the "DIY Weddings Crafts Contest" in collaboration with Etsy.com generated the highest traffic day ever to our Weddings site and the highest level of engagement with 40 page views per visitor.
Merchandising
Revenues were $9.0 million for the second quarter of 2009, as compared to $16.2 million in the prior year's second quarter. As expected, the 2009 second quarter results include lower royalty revenue from Kmart as the relationship continues to wind down. In addition, prior-year period results benefitted from revenue related to an Emeril Lagasse endorsement program as well as initial shipments of Martha Stewart Crafts products to support entry into Wal-Mart stores nationwide.
Operating loss was $(0.7) million for the second quarter of 2009, compared to operating income of $8.4 million in the second quarter of 2008. The decline reflects an impairment charge of $(5.5) million related to an equity investment.
Adjusted EBITDA was $5.1 million for the second quarter of 2009, compared to $8.8 million in the prior year's second quarter.
Highlights
- The Martha Stewart Collection exclusively at Macy's continues to demonstrate solid performance. Some of our top-selling categories in the quarter included cookware, enameled cast iron, bakeware, bath towels and moderate bedding.
- Development for Martha Stewart Clean, a 10-SKU line of all-natural cleaning products with The Hain Celestial Group was completed. The line is scheduled to launch in early 2010.
- Chef Emeril Lagasse's updated collection of top-quality stainless steel cookware with All-Clad relaunched at Macy's this month.
Corporate
Total Corporate expenses were $(9.6) million in the second quarter of 2009 down from $(12.8) million in the prior year's quarter. Adjusted EBITDA loss was $(7.1) million in the second quarter of 2009, an improvement of 38% from $(11.6) million in the prior year's quarter, reflecting the positive impact of the Company's expense management actions. The second quarter of 2008 included $1.5 million in certain non-recurring costs.
The Company will host a conference call with analysts and investors on July 29th at 10:00 a.m. EDT that will be broadcast live over the Internet at www.marthastewart.com/ir.
SOURCE Martha Stewart Living Omnimedia, Inc.
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