Let us not forget that, in addition to all the other things on Martha’s plate, she also serves as Non-Executive Chairman of the Board at MSLO, the company she founded. The management of the company is handled by a management team currently without a leader, after Lisa Gersh stepped down in December 2012. (A replacement for Gersh has yet to be named.) Yesterday morning, MSLO had a telephone presentation to its investors to review 1Q results for the company.
You can read the entire transcript of the earnings call at Seeking Alpha (which may require free registration), if you’re interested in the behind-the-scenes details of the company’s workings. Some interesting points include:
- Revenue for the quarter totaled $37 million, down 25% from the prior year quarter. Of the total $12.6 million absolute dollar decline in revenue, approximately $9 million can be attributed to the restructuring actions taken in publishing and broadcasting last year.
- Publishing segment revenue declined 21% in the quarter, reflecting lower print advertising and newsstand revenue, offset somewhat by a 12% growth in digital advertising revenue.
- Print revenue declined by $7 million, including $3.2 million on the advertising side and $3.8 million on the circulation side.
- Our digital advertising revenue of $4.8 million was a record first quarter performance for this business and included a significant increase in video related ad revenue.
- Merchandising expenses were significantly higher in this year’s first quarter, due largely to cost related to ramping up for the JC Penney launch.
- There is still uncertainty with respect to revenues to be generated by JC Penney partnership, due to the pending court case. Those royalty revenues were not included in the forecast for 2Q.
So, what we see from the earnings call is further proof of the shift underway at MSLO, as the company seeks to streamline its publication division and also take advantage of new media as a distribution channel for Martha’s sought-after ideas and expertise. Industry-wide, publishing is undergoing much turmoil at this time, but MSLO is well-positioned to become profitable through its merchandising partnerships with major retailers like Macy’s, Home Depot, Michael’s, Staples, and, eventually, JC Penney.
From the meeting transcript, posted on Seeking Alpha:
Before turning the call over to Ken (West, Chief Financial Officer, MSLO), I want to update you quickly on a few items of interest. First, we are excited to report that our rollout with JC Penney is under way. In April, JC Penney’s began rolling out Martha Celebrations, our new line of disposable, stylish paper products for easy entertaining, as well as MarthaWindow, MarthaLighting, MarthaRugs and MarthaMirrors in JC Penney stores and on jcp.com. The rollout will continue through much of the second quarter.
Additionally, we have had some initial discussions with JC Penney’s new CEO, Mike Ullman and other executives. All of us greatly value our partnership and we are looking forward to working with the new team.
In conjunction with the management changes at JC Penney, we reported earlier this month that their two representatives on the MSLO Board have left JC Penney and have resigned from our board as well. JC Penney is actively identifying new designees and we anticipate they will appoint replacement representatives in the near future.