Raising the House of Stewart - TheStreet

Martha Stewart was released from federal prison Friday after a five-month sentence for obstruction of justice.


Nat Worden spoke to brand expert Claude Singer, a senior vice president with Siegal & Gale, about the effect Stewart's ordeal has had on her namesake brand, and what might be in store for her company,

Martha Stewart Living Omnimedia




How would you describe the current state of Martha's brand?

A: I think brands are very difficult to evaluate, and people who claim to have a precise metric for evaluating brands are fooling themselves. However, I think Martha's brand has always been inherently strong because there is substance behind it. Martha Stewart's brand is not just about her celebrity. It's about a promise to help people live better, more gracious, more efficient and more comfortable lives. That's her promise, and she delivers on it with advice, products and informative entertainment. In this information age, Martha Stewart has information that consumers want to buy.


Is she making all the right moves here? If you were her consultant, what sort of things would you recommend?

A: I think Martha is showing a sincere spirit of being chastened. She's not defiant, but she is unrepentant. So, from a personal standpoint, I think she's carrying herself very well. We all know that Martha Stewart bears the burden of being a somewhat imperious personality. She's known to be a tough boss, but she's not being arrogant now. She's talking about jail as a sobering, life-affirming experience. She's not making light of it, but she's not pretending it's a great tragedy either. She's also referring to people in jail appropriately as people who need help, so she's making herself more empathetic. But she's clearly still a very strong woman.


People seem to be riveted by her story. They obviously love to watch her on television. But do you think people will actually like her again and buy her products?

A: It's a better story than ever. A brand is a story, and I think you can say in this case that Martha Stewart's brand is enhanced by this episode. There's no question about it, she is more appealing, not less. Her style and products have come from an elite image to a more mass market image, largely from her association with Kmart, and this just continues that. She's going to be more popular and more in the public eye.


Has there been a shift in public attitudes about her character since she went into prison?

A:I think the public has been very realistic in their assessment of Martha Stewart. They've seen her as a person who has great strength of character, determination and intelligence. They see that she made a mistake by lying to the feds, and I don't think there's anyone in our society who doesn't realize that people lie from time to time, and it's usually not an offense punishable by jail time. This has never been perceived as being in the same category of, for example, Bernie Ebbers, whose crime might be having lost billions of dollars of other people's money and ruining thousands of lives. Look at Ken Lay, for instance, or any of the Enron people. She did not do things like that, and I think the public is very able to differentiate between her and the CEOs who have ruined lives.


You are not a stock expert, but our readers are investors. What do you think about her company's stock price now? Will it ultimately prove to be a good investment, based on your enthusiasm about her brand?

A: I think the easy money has already been made. Now, the stock is moving up nicely with fairly good volume. I think the stock will do well, but it will settle into a place eventually where the financials will be more important than just the luster of the brand. So far, people have just been putting their faith in the brand, and more conventional analysts have had trouble applying fundamental valuations to the price. That will change.


What sort of dynamic do you think will exist between Susan Lyne and Martha Stewart when they begin working together? Will Martha be able to handle not being in charge?

A: I don't feel comfortable answering that except to say I have heard people say that their personalities complement each other nicely -- they have a good cop/bad cop thing going on. One point in their favor is that all the factors going into the relationship are well known, so I don't think there will be a lot of surprises there.


Stewart is in the process of appealing her conviction. What is at stake in that process in terms of her brand?

A: I don't think much is at stake anymore. Her legal issues are truly a matter of history. Whether she wins or loses will not affect her image, her brand, or her company's stock.


Stewart is slated to star in a new version of Donald Trump's NBC prime-time reality show, "The Apprentice." Will her show be more popular than Trump's, or less?

A: There is a small risk with this show. Nobody can step into a late-night talk show and be Johnny Carson. We don't know how the show's going to be structured, or how her personality will jibe with it. It could prove to be a misstep in the end, but all that could happen is the show is canceled like so many other poorly conceived shows in the past. I don't think it's necessarily a good idea though. It risks showing her unappealing, imperious side. But it will keep her in the public eye, which is always good. So, there is a bit of a risk there.


Do you think Martha committed a crime, or was she a victim?

A: I think insider trading is a very difficult crime to enforce. It's like tips in a restaurant -- you'll never know every tip that's passed, and you'll never be able to tax them perfectly. It's analogous to that. You're never going to catch all insider trading. Martha should have known better. She should not have lied. She did. She tried to cover her tracks, and she didn't speak correctly to investigators. She made some mistakes, and she was arrogant. All that being said, should she have gone to jail? No. I think if you took a poll, you would find that Americans overwhelmingly agree with me on that. And by the way, I am not a liberal and I'm not very sympathetic with radical feminists, but do think that the fact that she was a woman counted against her. I really do. She served a jail sentence while true corporate criminals are still free. That's what everybody says on the Street, and they're right. This woman was taken down because of who she was, not because of what she did.


How do you think this whole ordeal has changed her as a businesswoman and a person?

A: I think going to jail changes anybody. In my childhood, Johnny Cash, you know, visited the dark side and ended up in jail. Later, he came back to Fulsom Prison and sang the "Fulsom Prison Blues." I think it changes everyone, and it changed Martha. But one thing that didn't change is that she is a person that profits from her life experience. She is an amazing story. She rose from rather modest beginnings and capitalized on her brains and her beauty to lead a media empire. It's impressive, and I think she will take this chapter of her life and use it productively as she has all others.