Losses Prompt Job Cuts at Martha Stewart Internet, Direct Division

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Martha Stewart Living Omnimedia Inc. will eliminate 40 jobs from its money-losing Internet and direct commerce division, representing about 6 percent of the company's work force, Reuters reported Friday.


The news service said the online and direct mail operation lost $24.8 million before interest, tax, depreciation and amortization last year in addition to a $25.5 million loss in 2000. Sales fell 2 percent to $48.8 million. Martha Stewart Living recorded a 3.3 percent falloff in fourth-quarter profits last month and said in its earnings report that it expects the Internet and direct commerce unit to benefit from new management.


The New York Post Friday characterized the decision as the "first massive cost-cutting from new division president Shelley Nandkeolyar" since his recent appointment. He was previously vice president of the e-commerce division of Williams-Sonoma Inc.


The tabloid reported that the company will have about 600 employees following the layoffs. Spokesperson Elizabeth Estroff was quoted as saying the "reorganization is taking place within our Internet/direct commerce segment and has nothing to do with our retail merchandising segment, or more specifically, our programs at Kmart. To draw any connection between the two would be inaccurate."


Nandkeolyar was described as responsible for revamping the Internet/direct commerce division, which includes the Martha by Mail catalog, marthastewart.com, Marthasflowers offerings and links to sites such as wedding registry and gift business The Wedding List. The revamped Marthastewart.com site debuts March 28.


Internet/direct commerce was described as "a consistent money loser," but the company said the division will break even by next year.


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