Notre Dame ReSource: Stewart's company should be OK despite conviction

by Dennis Brown

Despite the conviction of Martha Stewart this afternoon, her company, Martha Stewart Living Omnimedia, is in good hands and should be able to weather the storm, according to James S. O’Rourke, a Notre Dame professor who specializes in corporate communications and public relations.p. Stewart’s personal fate will depend in large part on the sentence that awaits her. Whether she goes to prison or not, however, O’Rourke believes she can return to the company, though not as chief executive or as a director.

“She’ll never serve as the director of a publicly traded company again,” said O’Rourke, professor of management and director of the Fanning Center for Business Communication. “But she’s still Martha Stewart and, for all her flaws, she has a wonderful sense of taste and an instinct for the finer things in life. She’s shown, time and again, that she can design, develop, and deliver what American homemakers aspire to.”

If Stewart receives a prison sentence, O’Rourke believes that, once served, she likely will be eager to jump back into the daily grind of recipe review, photo selection, and project management.

“I suspect, at least initially, she’ll welcome the challenge and the opportunity to rehabilitate her image,” he said. “The more important question is whether she’ll be content to work in the shadows, distancing herself personally from day-to-day issues as the brand matures. After a number of years, her value to the company may be more akin to that of corporate founders Dave Thomas of Wendy’s or Gordon Hartunian of ABC Warehouse.”

As for her company, O’Rourke says it is "basically in good hands. Sharon Patrick, Ms. Stewart’s longtime friend and confidant, will continue to serve as chief executive officer, while Lauren Stanich will direct the company’s publishing division, and Margaret Roach will continue as editor-in-chief of her magazines. The company has good external advice, including the counsel of Arthur Martinez, former chairman and CEO of Sears, and George Sard, a widely respected and very bright public relations executive.

“The central problem for the company is really one of branding alliances on the one hand and a sluggish economy on the other. KMart is MSO’s (the company’s NYSE trading symbol) chief retailer and they’re in dismal shape. If they don’t survive, or if MSO elects not to renew the company’s contracts, other retailers will be waiting in the wings, including Sears Roebuck&Company, Kohl’s, and, perhaps, Target. Sears Canada is already on board.”

In the end, O’Rourke says, "Martha Stewart Living Omnimedia, Inc. is much more than Martha Stewart. And, properly managed, that firm will continue to do well in the near term, if only because Ms. Stewart has so many loyal fans and followers in the United States and abroad. As with other design brands, however, the company’s ability to succeed in the long term is dependent on the creativity and leadership of it management, as well as the market’s response to their products.

O’Rourke pointed to the House of Chanel, Bill Blass, Versace and others that have survived in the absence of their founders. But he hastened to add that “Martha Stewart is different, primarily because it’s not about gowns, eye wear, neckties, or shoes. It’s about a lifestyle. It’s about emulating the style of a woman who — at one time — seemed to have it all. Once she’s paid her debt to society, the safest thing for Martha to do is keep her head down, keep designing, and begin demonstrating a kinder, gentler side to her personality and her firm. Some charitable work and regular deposits in the community goodwill bank certainly wouldn’t hurt.”

Contact: Professor James S. O’Rourke is available for further comment at 574-631-8397 (office) or 574-272-1773 (home). The following comments are for use in whole or part.

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