Martha readies flooring revamp

NEW YORK — While comparable store sales of Martha Stewart branded products at Kmart stores actually managed to gain over the past quarter, the 13-month-old Martha Stewart Signature flooring program continues to struggle and will be revamped.

Sharon Patrick, president and coo of Martha Stewart Living Omnimedia, last week said results for the flooring program are "below expectations" during the company's third quarter conference call with analysts.

"We are addressing the problems and look forward to a resolution," she said. Patrick outlined the main issues with the program, produced under license by Shaw Industries:

• The number of stores carrying the line is "significantly" lower than the 2,000 originally projected, and the retailers that do carry the line are a "much smaller, much more fragmented, diverse group of retailers," than had been anticipated.
• The number of product offerings is too large and needs to be streamlined.
• In-store presentations and product galleries need to be modified "for more productive selling of product," Patrick said.
• Pricing must be adjusted. "The combination of these things is what is contributing to the slower-than-expected progress since the launch a year and a half ago," she said.

Reached late last week, Shaw Industries declined comment on Patrick's statements.

Patrick also addressed MSO's decline during the quarter in merchandise sales, from $10.1 million during last year's comparable quarter to $8.9 million this year.

"The decrease in revenues is due principally to lower product sales of Martha Stewart Everyday product at Kmart as a result of store closings," James Follo, cfo, said. "Since early 2002, Kmart has closed approximately 600 stores."

Sales of patio furniture kept the Martha Stewart Everyday line's sales at Kmart on the plus side, with sales of other MSE product at the store basically flat. For Q3, MSE sales at Kmart increased 3 percent overall on a comparable store basis year over year. While they declined 13 percent on a total store basis, MSO attributes the fall to the discount retailer's store closings, "and not brand label performance," Patrick noted.