Dressing Up Martha Stewart

Investors look for financial progress and big marketing splashes.
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Martha Stewart Living Omnimedia

(MSO)

will try to top a recent trip to Macy's when it posts first-quarter results Tuesday morning.

Earlier this month the company

teamed up on a deal with

Federated Department Stores

(FD)

to pipe Martha Stewart housewares through Macy's outlets nationwide. The news sent Martha Stewart shares soaring past $20 near a 52-week high, a range the stock has held since. Last week the company set plans to build another Martha-branded subdivision with

KB Homes

(KBH) - Get Report

, this time in Atlanta.

After languishing in the second half of 2005, Martha Stewart shares are up 19% for 2006. Come Tuesday morning, analysts surveyed by Thomson Financial are looking for the company to lose 15 cents a share on $60 million in revenue, compared with last year's 37-cent loss on sales of $39 million.

Although the marketing deal with Federated doesn't kick in until next fall, it has provided the company with some much needed lift given last year's regrettable finish. The stock sold off steadily after Stewart's primetime TV venture with NBC on

The Apprentice

bored viewers and an extended merchandising deal with

Sears

(SHLD)

failed to materialize.

For now, the Macy's deal acts as an end run on prickly Ed Lampert, who controls Sears. Still, what is likely to drive growth are smart merchandising deals with the likes of Macy's and strength in publishing and online efforts.

Investors will keep their fingers crossed for more daylight on the publishing side. Another quarterly lift where ad bookings are concerned would be seen as a good sign for the Martha brand overall. Advertising pages at

Martha Stewart Living

rose 133% last quarter, while the company said

Everyday Food

showed "more profitable circulation" and higher advertising revenue.

The Martha daytime TV show has had decidedly mixed ratings, and there is hope for improvement there.

Details on new revenue-producing ventures such as the company's commitment to the scrap-booking industry and more news on interactive developments would also be welcome.

On the Internet, the company has said it will be making a $3 million investment to upgrade its sites. Chief Executive Susan Lyne would also like to make better use of the company's considerable video library and other assets online.