RealTime IT News

Martha Stewart: Growing in Style

I never thought it would happen. Lately, I've been watching Martha Stewart's TV shows on the Food Network. Actually, lots of people are watching her shows - as well as reading her books, buying her merchandise, listening to her radio shows and yes, surfing her Web site.

Martha Stewart decided to take her company public . Like most IPOs of last year, Martha Stewart is selling below its offering price, which was $18 per share.

Besides cooking and gardening, Martha is also a savvy businesswoman. Financially, her company is solid as there is $105 million in the bank. Then again, Martha Stewart need not be concerned with burn rates. The company is profitable despite the fact it has invested heavily in Net properties. Net income from operations was $9.3 million in the past quarter, which was a 26% increase from the same period a year ago.

As for revenues, in the first quarter these were $69.1 million, which were up from $53.4 million in the same period a year ago.

The Internet division is showing impressive growth rates. Revenues doubled to $10.6 million and registered users increased by 73% from 1999 to 1.28 million.

To help with the Web strategy, Martha Stewart received an investment from the premier venture capital firm of Kleiner Perkins. So far, the results have been strong. The marthastewart.com site has seven content channels (cooking & entertaining, weddings, keeping, holidays, home, crafts, and gardening). Of course, integrated within the rich content are opportunities for e-commerce. There are now over 1,800 SKUs.

Martha Stewart has also been making investments in Net properties. The most notable was BlueLight.com, in which Martha Stewart invested $13 million (getting 5%). The site is majority-owned by Kmart. Other investors include SOFTBANK Venture Capital and Yahoo!

True, Web sites that are branded on the founder have not done well. In fact, the performances have been dismal. Take drkoop.com, which itself needs a doctor.

But Martha Stewart is different. Her brand has lasted since the early 1980s. Even if she retires or dies, her company will live on. She has a strong management team and organization.

Despite the prevailing wisdom, e-tailing is not dead. It is here to stay. Rather, etailing requires content, fulfillment and alternative media outlets other than the Web. This is what Martha definitely has in her book of recipes.