Robert Passikoff

President

Brand Keys

No matter how tastefully they tried to do it, Martha Stewart Living Omnimedia hired the Blackstone Group last week to try to sell the company. Oh, and “explore other opportunities.”

That’s a good thing, because even talk of a sale doubled the current share price, bringing it to $10, or a valuation at around $550 million. Which is less than one- third of the $1.9 billion at which the company was valued before Martha served five months in prison, six months of house arrest, while the stock plummeted 88%.

Back then, when Martha the ‘Human Brand’ was found guilty on all counts, the brand lost a good deal of trust among her then-loyal customer base. At that time, according to the Brand Keys Customer Loyalty Index, the brand rated lower than Enron, although to be fair, it’s easier to ‘hate”’ a Human Brand than some faceless corporation, no matter how dreadfully it behaved. It took nearly half a decade for the brand just to edge back to break-even loyalty levels, and it’s hovered at there ever since. The brand has not managed to return to the early-21st century levels, when the brand was rated the highest of every brand we tracked. Definitely not a good thing.

Martha’s company and brand has since failed to migrate to a new generation of consumers. Her namesake magazines only generated $2.7 million in operating income. NBC dropped all her shows, relegating them to the void that is the Hallmark Channel, and broadcast lost $1.6 million.

“Martha Stewart” has turned into a default brand, well-known and a lot easier for retailers to add to their product mix than trying to create a new brand on their own, but not much more. So successful merchandising efforts, even in the face of the Kmart non-renewal, with the likes of Macy’s and Home Depot, selling paint, pillows, and plates, have provided $25 million in profit.

Stewart turns 70 this year, gets to rejoin her Board after her five-year banishment, and has hired Lisa Gersh to fill the long-vacant CEO spot. Martha owns all of the Class B shares and controls 90% of the total voting rights, and it’s been reported that while an offer for the company has not been proffered, Stewart does not regard an outright sale as such good thing.

Attracting more consumers and being more profitable requires more than just being known or even well known. It requires being seen as better meeting, or exceeding, expectations consumer hold for the category in which the brand competes. If you can do that you will have more highly engaged customers, more sales, and a better bottom line.

Oh, and be far more attractive to prospective acquisition or investment partners.