Consultants: Stewart brand may be damaged beyond repair, but furniture line might be OK
By Clint Engel -- Furniture Today, March 15, 2004
High Point — High Point— In the days since Martha Stewart's conviction on securities-related charges, some retail consultants and brand experts have contended the brand name may be damaged beyond repair.
"The brand as we know it is dead," consultant Howard Davidowitz told CNN/Money last week. "Any brand that's built exclusively around a single personality can't survive something like this."
And there have been signs of deterioration in parts of the Martha Stewart empire:
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The New York Times Syndicate, which distributes the "askMartha" column to some 200 newspapers, said it will rename the feature "Living."
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Viacom's 18 CBS and UPN stations, including seven in the nation's Top 10 markets, said they will drop the "Martha Stewart Living" TV show.
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Shares of Martha Stewart Living Omnimedia fell more than 22% the day of the guilty verdict and lost nearly 8% the following Monday.
Robert Passikoff, president of Brand Keys, which tracks brands and profitability, said Stewart's brand strength sank to a new low after the verdict — lower than Enron's at the depth of that scandal.
He said some devoted fans could become more fiercely loyal now, but others are likely to feel betrayed.
"She let them down," Passikoff said. "She is the brand."
But he added that among Stewart's products, furniture from Bernhardt may stand a better chance than sheets or magazines.
"Consumers know that she didn't build the furniture; someone else built the furniture," he said. "The retail outlet does not, in fact, have any relationship with Martha Stewart. It is at least one step removed."
Dan Hill, president of consumer research firm Sensory Logic, sees it a little differently. Furniture, he said, is a fixture in the home and represents a significant investment in Martha Stewart.
"I'd be surprised to see anyone, except her loyal cadre, really making that depth of commitment at the moment," he said.
Furniture sales don't seem to be hurting yet, however.
Martha Stewart Living Omnimedia's merchandising division, citing furniture in particular, reported strong sales in the fourth quarter and for all of last year.
Bernhardt Chairman and CEO Alex Bernhardt Sr. said he has heard anecdotal reports of good sales the weekend after the verdict.
He said he has talked to about 15 of the largest Martha Stewart accounts "and not one of them has said they're going to change anything they're doing."
He added that Stewart called him last week, thanked the company for its support, "and expressed her continued excitement about the furniture program."
Bernhardt also met for four hours with senior Omnimedia executives in New York.
"I found the atmosphere … to be very positive, very enthusiastic and energetic," he said. "They're back at work trying to produce quality publications and products."
