Loss Shrinks at Martha Stewart Firm

Martha Stewart Living Omnimedia Inc., whose namesake founder was released from prison last month, narrowed its first-quarter loss as sales at its smaller magazines slowed the pace of revenue declines.

The net loss shrank to $19.2 million, or 38 cents a share, from $19.5 million, or 39 cents, a year earlier, the New York-based company said Tuesday. Analysts expected a loss of 29 cents, according to Thomson First Call. Sales fell 13% to $38.7 million.

Sales rose 6% at the publishing business, the only unit to boost revenue, as the firm increased circulation and advertising at Everyday Food. Lower ad sales and higher costs at flagship magazine Martha Stewart Living doubled the unit’s loss to $7.7 million. Sales of Martha Stewart-branded merchandise such as paint and linens also fell.

“The loss is significantly wider than what people were expecting,” said Gary McDaniel, an analyst at New York-based Standard & Poor’s. He had predicted a loss of 33 cents a share. “It leads me to believe that the turnaround is taking longer than expected.”

Martha Stewart Living expects a second-quarter operating loss of about $31 million, including a non-cash charge of $15 million to cover vesting of warrants related to a syndicated TV program featuring Stewart that will be filmed this year.

The company’s shares rose 41 cents to $20.75 on the New York Stock Exchange.

The company said it was seeing “early signs” of improvement in the publishing business and expected to increase ad pages in Martha Stewart Living by 30% this quarter.