Martha, the brand, ain’t what it used to be
Martha Stewart Living Omnimedia will soon have a new owner, having agreed to Sequential Brands Group’s $353 million cash and stock offer. But, as an article by Walter Loeb on Forbes.com points out, the value of Ms. Stewart’s brand has slipped considerably over the years.
According to Mr. Loeb, Martha Stewart Living Omnimedia revenues fell from nearly $328 million in 2007 to just under $142 million last year. The company, which generates sales from Martha-branded magazines and consumer brands sold in Macy’s and Home Depot, has been unprofitable for all but one year going back to 2003.
Ms. Stewart’s empire has taken a hit over the years as the company’s publishing wing struggled. Legal woes have also affected Ms. Stewart and her brand. She was imprisoned for a short time following a conviction for insider trading in 2004. More recently, Ms. Stewart came out on the wrong side of legal dispute with Macy’s after the company claimed she had violated the terms of their contract in inking a deal with J.C. Penney.
Photo: Martha Stewart
Despite past missteps, CEO Yehuda Shmidman is confident the Martha Brand will grow as part of Sequential Brands.
"Research shows that the Martha Stewart brand has 96 percent awareness among women in the U.S. and seven out of 10 women say that Martha has and does influence the way they think about, organize, and manage their homes," said Mr. Shmidman in a statement. "Looking ahead, we believe that we can leverage our global activation platform at Sequential in partnership with Martha and her team to develop the next chapter of growth for the Martha Stewart brand."
Do not count Mr. Loeb among those as positive about the outlook for Ms. Stewart’s brand. While he acknowledges the brand is well known, he contends that Ms. Stewart is out-of-touch with younger consumers. It will be up to Sequential Brands to make the brand relevant again.
Ms. Stewart, who owns 46.2 percent of her company, will become chief creative officer of her brand under Sequential and is widely expected to join its board, as well.
- Sequential Brands Group Signs Definitive Merger Agreement to Acquire Martha Stewart Living Omnimedia – Sequential Brands Group, Inc.
- Martha Stewart Living to sell itself in $353 million deal – Reuters
- Martha Stewart: The Queen of Home Has Lost Her Throne – Forbes
- Martha Stewart Living to Be Bought by Sequential for $353 Million – The Wall Street Journal (sub. required)
Discussion Questions
What is your assessment of the current value of the Martha Stewart Brand and its future potential? Do you agree that it has a problem connecting with Millennials and what will it take to fix it?
Poll
BrainTrust
To be literal-minded, the value of MSLO is whatever somebody is willing to pay for it — in this case, $353 million by Sequential Brands. It probably becomes the most high-profile brand in Sequential’s portfolio, which consists mostly of second-tier designer and celebrity brands along with labels like Avia that are managed mostly as “exclusive brands” today.
Certainly the last several years have tarnished the Martha Stewart brand, in particular the tug-of-war between Macy’s and J.C. Penney with Martha herself appearing to play one side against the other. But the bigger challenge facing Sequential will be MSLO’s relevance to Millennials, as George suggests. A brand built on “old media” (magazines and TV in particular) will need to find more effective ways to refresh its audience and itself.
Brand value for Martha is low, low, low. The new shop could drag some value out of it for the Millennial space if they reworked it and created the understudy team at Martha’s joint. The sub brand — M. Stewart or MStewart (cool font) would represent a design group offshoot that has a new look and feel and color and moves away from the Grandma Stew look and feel.
Kind of like an “Orange is the New Stewart” look (and purpose and recipes).
For the extreme end call MStew, the food-related only stuff. Helps shoppers create the Stew to feed and party with.
Also, with a new brand, get the old brand and get Martha out of the pictures and off the gossip pages. She goes dark for awhile. Get a few new people in the limelight. We need Stew (a guy’s guy) that has a man cave. We also need a young lady that has dark hair and we can call her Ms. M.
Rebuild the castle with a new prince and princess. The queen sits tight till reintroduction.
OK, that’s $9 of brand idea work.
Martha Stewart Living Omnimedia is one of the most prescient and relevant monikers ever created. In the late ’90s, Ms. Stewart read the omnichannel, omni-category, omni-content tea leaves and she was right. A series of unfortunate events intervened and the ones that took her hand off the rudder were arguably the most deadly and dilutive. Sequential would be smart to evaluate and prune the Martha portfolio before forging ahead into new territory. A visit to Ms. Stewart’s blog or a listen to her interviews will confirm her grasp of, and insatiable appetite for, all things modern, digital and Millennial. Sequential was smart to keep her in the mix.
I have to give Martha Stewart credit for being able to sell and reposition her brand for the umpteenth time. She has at least three major strikes against her: 1. Prison time 2. Retailer disputes 3. Being 73 years old and trying to connect with millennials. And yet here she is again, with another chance. She is nothing if not persistent.
Wow, talk about overpaying!
MS must be pinching herself about the good news!
There certainly is room to gain some value from the brand, but good luck recovering that investment thru margin in the next 5 years.
Declining value aside, I think there is a potentially toxic situation in this deal. Martha Stewart built a empire, went to jail, reconstructed herself, and beat JC Penney, among other things. At some point, Mr. Shmidman, a financial genius but not necessarily a marketer, is going to demand that certain things happen, and she may not go along. The sequel could very well be destructive.
Celebrity brands almost always have a short shelf-life for the simple fact that the celebrity her(him)self is in the spotlight for only a few years. In Ms. Stewart’s case, the brand had more than the usual superficial connection to the celebrity, so it was extended longer than usual (though offsetting this, of course, were image problems brought on by her extraordinary legal/ethical issues). But at any rate, I don’t see the brand as “fixable”… any more than Studebaker was.
As long as Martha is at the (creative) helm, the brand will retain core followers and a certain integrity. The future of the brand depends on the creative leaders who follow her; in this sense it’s like a fashion house. When Tom Ford went to Gucci, he revitalized it. When Martha retires, her successor will determine the ultimate fate of the brand for the next generation.
The Martha Stewart Brand has had its day in the sun. There is a problem connecting not only with Millennials, but also with many Boomers as well. There are so many other options which are available that don’t represent a criminal who has made poor choices in her life, and who should not be rewarded for shirking her community responsibilities. Betty Crocker has more appeal on many things than Martha Stewart!