Stewart’s Firm Reports Loss, Gives Warning

Martha Stewart Living Omnimedia Inc., still reeling from the legal woes of its celebrated founder, posted a wider second-quarter loss Tuesday than Wall Street had expected as it struggled with declining advertising. It also warned of more losses for the rest of the year.

In a move to focus on its strengths, the company announced that it would eliminate its catalog business called the Catalog for Living by year-end, though it will continue with its direct-to-consumer floral business as well as its website at www.marthastewart.com.

Consequently, the company’s workforce will be reduced to 450 from the current 474 by year-end. That’s down from 558 at the beginning of 2004.

The New York-based company also announced the launch of “Everyday Food,” a TV program that will air nationwide on PBS, building on the success of its magazine that bears the same title. It is the company’s latest step to distance itself from Stewart’s name, which is stamped on an array of products, such as pots and towels.

Martha Stewart Living posted a loss of $19.29 million, or 39 cents a share, in the three months ended June 30, contrasted with a profit of $931,000, or 2 cents a share, a year earlier. Analysts surveyed by Thomson First Call expected a loss of 33 cents in the second quarter.

Shares of Martha Stewart Living fell 15 cents Tuesday to $11.25 on the New York Stock Exchange.