Martha Stewart Living shareholders offer support for convicted founder

Monday, June 21st 2004, 5:53 pm

By: News On 6

NEW YORK (AP) _ Martha Stewart told shareholders Monday that she misses her old position at her namesake company and hopes the domestic empire she founded functions as usual while she deals with her legal woes.

``I miss my old job terribly,'' said Stewart, who resigned as chief creative officer and from the board of Martha Stewart Living Omnimedia Inc. in March after she was convicted of lying about a stock sale.

But Stewart, who now has the title of founding editorial director and remains the majority shareholder, said she is still involved in the multimedia company she created.

Addressing about 100 shareholders, Stewart declined to talk specifically about her legal problems, given what she described as her ``delicate, somewhat fragile'' situation. She did say the past year has been ``fraught with real sorrow.''

Stewart, who has asked for a new trial, is scheduled to be sentenced July 8. She is expected to get 10 to 16 months in prison.

Wearing a beige pantsuit, Stewart signed autographs and chatted with shareholders after a meeting that was full of supporters. But the overall advertising and business climate has been less than forgiving of her legal troubles.

Martha Stewart Living, which has been struggling with losses, disappointing sales and a battered stock for the past two years, last month reported a wider-than-expected loss for the first quarter. It also said advertiser defections will likely push losses for the second quarter beyond Wall Street's expectations.

In a move to distance itself from its troubled founder, the New York-based company reiterated its plans to place greater emphasis on the ``Living'' in its Martha Stewart Living magazine, starting with the September issue. It also repeated that it is expanding its guaranteed circulation for the Everyday Food magazine to 750,000 from 500,000.

The company announced in May that its floundering ``Martha Stewart Living'' television show will be put on hiatus after the current season, eliminating 40 jobs in the television division. The company recently signed a multiyear agreement with The Style Network to air repeat episodes of ``Martha Stewart Living.''

Shares in Martha Stewart Living fell 8 cents to $8.97 Monday on the New York Stock Exchange. They were trading at more than double that before Martha Stewart was tied to an ImClone Systems Inc. trading scandal two years ago.

Struggling with the fallout of Stewart's conviction, the company moved to bolster its management. Shareholders elected four new executives to the board Monday, creating a total of nine directors. They are: Rick Boyko, managing director of the Virginia Commonwealth University Adcenter and former co-president and chief creative officer of Ogilvy & Mather; Michael Goldstein, former chairman and CEO of Toys ``R'' Us; Susan Lyne, former president of ABC Entertainment; and Wenda Harris Millard, chief sales officer of Yahoo! Inc.

Following the meeting, CEO and president Sharon Patrick declined to speak about any future layoffs or other moves the company was embracing to distance itself from Stewart.

During her address, Patrick said that Martha Stewart Living executives have been speaking with consumers and advertisers, and were not ``caught unprepared'' by the conviction.

``Consumers remain stalwart,'' she said, though she conceded that some advertisers won't return until there's a resolution.

``For many advertisers, it isn't over until it is over,'' she said.

While there was plenty of shareholder support for Stewart, there was a split among the audience as to whether the company should sever its ties to her.

During the question-and-answer session, Gerrie Nussdorf of Manhattan said she didn't like the recent moves to downplay Stewart's name on the magazine.

``Martha has become an icon. The public gets inspired by more than just the merchandise,'' said Nussdorf, who owns 500 shares and doesn't plan to sell them. ``The company needs to support Martha.''

But Karen Skoglund, another fan and shareholder, said she thinks the company's strategy to distance itself from Stewart is wise.

``I'm in total support,'' of her, Skoglund said. ``But the company has to lay low'' right now.