Filed under: Wal-Mart (WMT)
Martha Stewart Living Omnimedia’s (NYSE: MSO) recent announcement that its crafts line would be debuting in Wal-Mart Stores, Inc. (NYSE: WMT) stores nationally sent MSO up more than 5% at first, but the stock has since given all that back and then some: the stock is down nearly 10% from where it was before the announcement.
The company needs to replace the guaranteed licensing fees from K-Mart that are in the process of phasing out, and revenue from that business is likely to plummet when the guarantee declines from $65 million this year to around $20 million next year.
But Wal-Mart? Haven’t their been entire books written on how tough it is to make money selling to Wal-Mart? It’s easy for me to understand Wall Street’s skepticism about this deal, and there have been a lot of uninspiring developments for the company in recent months: first the company paid $45 million for the Emeril empire, what was supposed to be company transforming acquisition. Then a few months later, CEO Susan Lyne resigned abruptly — which doesn’t speak well for the new strategy.
Maybe the Wal-Mart deal will work out splendidly — but the company appears to be all over the place.
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