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.