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When Martha Stewart began a small catering business in her Westport, Connecticut, kitchen she had no idea that it would grow into a worldwide home-and-garden information empire. A former stockbroker turned suburban housewife, Stewart first cooked for friends and local organizations. Today, her company, Martha Stewart Living Omnimedia, Inc., produces books, magazines, and television and radio shows, all of which share the taste and tips of founder, Martha Stewart. The company helps millions of consumers eat, entertain, and decorate the "Martha" way.
After Martha Stewart left her career as a New York stockbroker in 1973, she took several years before deciding what she wanted to do next. Finally, in 1976, she began a catering business, drawing on two of her long-time loves: food and organizing parties and other events. Stewart and her friend Norma Collier ran a company called Uncatered Affair, but conflicts between them ended the partnership. Stewart then ran a small gourmet food store, the Market Basket, in her hometown of Westport, a wealthy suburb of New York City. Local residents included such celebrities as actor Paul Newman (1925-), and Stewart often catered their lavish parties. Her reputation for providing good food and carefully planned events steadily grew.
Stewart became such a success that she was written up in several national food and women's magazines, and in 1979 she was named a food editor for House Beautiful. A few years later, she caught the attention of publisher Alan Mirken, who attended a party Stewart catered for her husband Andy, also in publishing. Mirken said in Just Desserts, a biography of Stewart by Jerry Oppenheimer, "It was an extraordinary party.… The food was very good, very different looking, and the whole package of the party was incredible. So I felt she had book potential in her."
With Mirken's backing, Stewart released her first book in 1982. Entertaining featured recipes Stewart used in her catering business, along with color photographs and stories from her childhood in Nutley, New Jersey. Across the United States, interest in cooking was booming, and Stewart's book found a huge audience. Entertaining became a best-seller and marked the real start of Martha Stewart, Inc., a company devoted to helping average Americans eat—and live—well.
Stewart followed up Entertaining with another successful book, then began to write one every year. She also turned her attention to television. Stewart made her first TV appearances on NBC. Willard Scott (1934-), weatherman for the morning news show "Today," sometimes broadcast from Turkey Hill Farm, Stewart's home. Viewers saw her prepare a Thanksgiving turkey and learned her entertainment tips. In 1986, Stewart had her own show, a special called "Holiday Entertaining with Martha Stewart." Along with writing books and appearing on television, Stewart taught seminars on entertaining, charging up to $1,500 per person.
The next year, Stewart's name appeared on retail products for the first time. Under a deal with discount giant Kmart Corporation (see entry), Stewart became a consultant and the store sold sheets under her name. While still writing her books, Stewart turned to magazine publishing. With Time Warner's financial backing, she launched Martha Stewart Living in November 1990; a TV show with the same name soon followed. Jane Heller, Stewart's banker, told People magazine in 1999 that Stewart once said "I want to be rich and famous." The success of her growing company helped her reach that goal.
Through the 1990s, Stewart's popularity continued to rise. Sales of her magazine reached more than one million copies per month, and her show won several Emmys, television's highest award. Stewart, however, was not happy with having Martha Stewart Living financially tied to Time Warner. In 1997, she bought the magazine from the company for $75 million. At the same time, she formed Martha Stewart Living Omnimedia, Inc. (MSO) and launched a Web site, www.marthastewart.com . By 2001, 1.2 million people were logging on to the site each month.
By this time, Stewart's empire included a new television show, a newspaper column, and a mail-order catalog business called Martha by Mail. On her shows, Stewart often told viewers that an idea or a project was "a good thing"; the phrase became her trademark. For MSO, the good things continued in 1997, when the company struck a new deal with Kmart. The store began carrying a new line of kitchen and bath items under the brand name Martha Stewart Everyday. Stewart helped design the products and made sure they met her standards of quality. Later, the store introduced gardening and patio items as well. In 1999, yearly sales of Martha Stewart Everyday items totaled $1 billion.
The variety of goods offered under Stewart's name reflected her widening range of interests. MSO did not just offer recipes and tips for hosting a party. The expanding company helped consumers decorate their homes, beautify their lawn and gardens, raise children, and make simple-yet-elegant crafts by hand. To People magazine, Stewart was "the High Priestess of Homemaking." MSO let Stewart provide her "how-to" help through a number of electronic and print media.
One of Martha Stewart's most popular books is Weddings. Published in 1987, the book features photos of lavish weddings and offers tips so readers can plan their own weddings. Even with a $50 price tag, the book sold well. Today, Stewart's company still sells the book, as well as a magazine with the same name.
The next step in MSO's growth came in 1999, when the company went public, selling stock to investors. When trading began on October 19, shares in MSO sold for $18, then quickly doubled in value. Shortly after, Stewart told People, "We don't know of another woman who built a company from the basement, like I did … and is a billionaire on the first day of trading." The price fell after that, however, and in January 2002, Stewart sold three million shares for $15 each.
Annual sales for MSO went from $180 million in 1998 to $285 million in 2000, but the rate of growth slowed during 2001 when the United States entered a recession, or economic downturn. Still, Stewart's company continued to expand. The radio feature "Ask Martha" reached twenty-three of the nation's top twenty-five markets that year, and Stewart signed a new agreement with Kmart. Her relationship with the retailer was tested later in the year when Kmart announced slumping sales and massive store closings. Stewart pledged her loyalty to the company, giving its image a boost, but it did not prevent the retailer from filing bankruptcy in January 2002.
In 2001, MSO also announced plans for a new magazine, Martha Stewart Kids, to go along with an existing magazine about babies. In addition, the company reached agreements with other retailers and continued to target foreign audiences. Stewart's next goals included adding more men to her audience and relying more on Internet sales. The Web has accounted for about 18 percent of MSO's income, second only to the company's publishing ventures. In the November 12, 2001 issue of Adweek, an expert on Web sites praised the way MSO used the Internet: "There are things you can do on the site that you can't do watching television or reading a magazine."
The 1999 public offering of shares in Martha Stewart Living raised more than $129 million for the company; Martha herself owned 60 percent of the shares, worth $1.15 billion. In December 2001, however, there was trouble when a New York law firm accused Stewart's company of using an illegal practice during the early trading of the shares. Investors were allowed to buy shares at the initial $18 price, but only if they promised to buy more shares as the stock rose. MSO dismissed the charge, but the law firm sued on behalf of investors who bought stock in the company between October 1999 and December 2000. As of August 2002, the lawsuit had not been resolved.
Stewart and her company both took another hit, this time in 2002, when various government agencies and a House of Representatives subcommittee began examining her sale of almost four thousand shares of stock in ImClone Sytems, Inc. The company's former chief executive officer, Samuel Waksal, was a personal friend of Stewart's. She sold her shares in ImClone on December 27, 2001, the day before they plunged in value on the stock market. The timing of the sale raised the possibility that she or her broker had illegally obtained insider information about an impending government decision to deny ImClone's application for a new drug. As the controversy grew, Stewart insisted she had done nothing wrong, and at one point her lawyers asked the House subcommittee to clear her name, even before it finished its investigation. On August 12, the committee chairman, Republican James C. Greenwood of Pennsylvania, told the Associated Press, "We can't sweep something like this under the rug because Martha Stewart is a celebrity." In the meantime, shares in Martha Stewart Living fell 60 percent, revenue dropped, and Stewart's competitors gained a chance to steal away some of her customers.
Stewart told Adweek in 2000 that her curiosity fuels her search for new items and ideas that can help her customers live better. She said, "I give people what they want and need. I don't tell them what they want and need. It's a very big difference."