Martha Stewart Living Omnimedia Inc. chief executive Susan Lyne stepped down after attempting a turnaround that failed to revive the company's shares following Stewart's conviction for obstruction of justice.
Wenda Harris Millard, president of the media division, and Robin Marino, who heads merchandising, will be co-CEOs, the magazine and home-goods company said in a statement Wednesday.
Lyne, who helped develop top-rated TV shows “Desperate Housewives” and “Lost” for Walt Disney Co.'s ABC, became CEO in November 2004 when company founder Stewart was serving a five-month prison sentence. While Lyne, 58, expanded revenue and returned the company to an annual profit last year, the stock dropped 57 percent during her tenure.
“Much of the value destruction in the stock price was really not a result of anything Susan Lyne failed to do,” said RBC Capital Markets analyst David Bank in New York. “They had a real challenge in light of Martha Stewart's legal troubles.” He also cited a slumping U.S. economy and advertising market.
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Martha Stewart Living, the New York-based publisher of the namesake magazine and producer of “The Martha Stewart Show,” fell 48 cents, or 6 percent, to $7.50 at 4:15 p.m. in New York Stock Exchange composite trading.
“Management turnover is always cause for a certain amount of angst in the investor community,” Bank said. He rates the stock “market perform” and said Millard and Marino, who were hired by Lyne, are “a formidable team.”
Lyne will remain with the company in an advisory role for an unspecified period. During her time as CEO, she won back advertisers that deserted the company as Stewart became mired in legal problems from the sale of ImClone Systems Inc. shares in 2001. Stewart was convicted in 2004.
“Our principal goal was to rebuild the company and return it to profitability,” Lyne said in the statement. “We have done that.”
In anticipation of royalty payments from a Kmart merchandising deal declining this year, Lyne oversaw the creation of new partnerships with Macy's Inc. and Costco Wholesale Corp. She also acquired the media and merchandising business of TV chef Emeril Lagasse.
The expansion and an overhaul of the Martha Stewart Web site haven't been enough to lift the company's shares back to where they were before Stewart's conviction.
“The company had to do a really Herculean task of trying to re-establish Martha Stewart's image and to then broaden out its product lines,” Noble Financial Group analyst Michael Kupinski said in an interview. The Boca Raton, Florida-based analyst recommends buying the company's shares.
Lyne worked to restore a brand that had been tarnished by Stewart's stint in prison. Stewart, 66, has been the company's public face, showing TV viewers how to properly set a table and prepare an Asian salad. When Martha Stewart Living went public in 1999, the shares traded for a record $39.75.
Lyne said in a January e-mail to employees that she wasn't leaving the company. The New York Post had reported a week earlier that Lyne was looking to exit Martha Stewart Living. Lyne's contract officially expired Dec. 31 and was automatically renewed for one year.