In its first earnings report following the departure of Susan Lyne as CEO, Martha Stewart Omnimedia (NYSE: MSO) said Q2 operating income came in at $1.7 million. The numbers represent the completion of a turnaround from last year, when MSLO posted a Q207 operating loss of $7.8 million. Revenues were also positive, rising 5 percent to $77.1 million from Q207’s $73.4 million. The company attributed the two sets of numbers to merchandising deals and ad growth across its various business segments in the face of a struggling economy.
–Online: MSLO says that online revenues gained 28 percent in the quarter, growing to $3.2 million from last year’s $2.5 million. Flowers revenue was previously recorded in the internet segment and is now recorded on the merchandising side. As a result, this quarter’s numbers exclude $2.7 million revenue from the Flowers business. The company says it was able to make up for the removal of the Flowers revenue in Q2 thanks to ad gains of 31 percent that was more than offset by the transition to the Martha Stewart for 1-800-Flowers.com program. Rounding out the positive figures for its online business, traffic showed solid gains, with pageviews up 23 percent over the prior year’s quarter.
– Publishing: Revenues were $46.3 million compared to Q207’s $47.5 million. Total ad revenue grew 6 percent in the quarter, when excluding the prior-year contribution of Blueprint, which was shuttered last December. And though MSLO says ad rates continued to grow ahead of pages, Q3 is trending down approximately 15 percent over the prior year’s quarter.
– Broadcasting: Revenues came in at $11.4 million, slightly up from last year’s $10.4 million last year.
– Outlook: Conceding that the economy still has a lot of pitfalls going into the second half of the year, MSLO expects revenues to range from $65- to $67 million, with the company back to an operating loss in the range of $500,000 to break-even. The company essentially said that things would be worse were it not for revenue contributions from the $50 million Emeril acquisition in February.
– Update: Charles Koppelman, executive chairman of the Board, led off the conference call saying that the company had finally arrived at an “inflection point” three years of struggle. While the turnaround threatens to be turned back downward again due to increased economic challenges, Koppelman, along with co-CEOs Robin Marino, president of merchandising, and Wenda Harris Millard, president of media, put the emphasis on the successful Q2 and how they’re trying to prepare for a Q3 that is shaping up to be a more difficult and challenging time. More after the jump.
– On the internet front, a new standalone site, WholeLiving.com, was just launched. Harris said the site is being tied to MSLO’s Body & Soul mag and a radio show, offering advertisers more cross-marketing opportunities. Wedding tools were launched six weeks ago, which Millard expects will buttress revenues at MSLO’s related pubs.
– In Q3, internet revenue is expected to be slightly down from Q2, to around $3 million, said Howard Hochhauser, MSLO’s CFO.