March 8, 2006, 12:00 AM

Martha Stewart shifts from e-commerce to e-content

Martha Stewart Living Omnimedia Inc. continued to retool its Internet strategy in 2005 and in the process downsize its web retailing operation in favor of more digital content.

Mark Brohan

Research Director

Martha Stewart Living Omnimedia Inc. continued to retool its Internet strategy in 2005 and in the process downsize its web retailing operation. In 2005 Martha Stewart reported e-commerce sales of $11.2 million compared with $14.4 million the previous year, a decrease of 23.9%.

Overall, web retailing sales accounted for 5% of total sales of $209.4 million compared with 2004 when e-commerce was 8% on total sales of $187.4 million. Martha Stewart’s Internet and direct commerce division posted a net loss of $2.5 million in 2005 and $7.8 million in 2004.

Martha Stewart, No. 245 in the Internet Retailer Top 400 Guide to Retail Web Sites, began exiting web retailing two years ago when it closed Catalog for Living, once one of its biggest e-commerce and direct marketing business segments. Today the company’s e-commerce sales consist primarily of an online flower shop and some related content such as books and CDs.

Going forward Martha Stewart expects to grow its Internet business by selling more online advertising and other digital content. "Our web initiative is not limited to crafting. We continue to develop other popular areas of our web content, including recipes, holidays, kids and weddings,” says president and CEO Susan Lyne. “The Internet represents a significant opportunity for the company and we will be reinvesting some near-term advertising gains to position the company to take full advantage of the growing digital marketplace.”

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