Martha Stewart Looks to Complete Comeback

Hard times, and jail time behind her, queen of home fights to get back on top.

November 18, 2009, 12:50 PM

Nov. 18, 2009 — -- Martha Stewart often rises before her roosters; she confessed on a recent "Nightline" visit that she sleeps only three or four hours a night. And getting sick? Nonsense. "I'm never sick," said Stewart. "Why get sick? It's a waste of time."

Stewart seems to have only one speed: fast forward. And that, to use the phrase she made famous, may be a "very good thing."

In her most-revealing television interview since serving five months in prison in 2004 for lying to investigators about a well-timed stock trade, Stewart gave "Nightline" unprecedented access to her daily life and her business empire, Martha Stewart Living Omnimedia, (MSLO). It is a critical moment in the company's evolution. The world's most famous homemaker gamely agreed to answer all questions and had some surprising reflections on her legal troubles and on one of her TV competitors, Rachael Ray.


The interview came at a particularly sensitive time for Stewart, as business analysts say the next eight months are crucial to her company's long-term success. Does she agree?

"[It's] fair to say that this is our growth period, that's what it's fair to say, we are growing," said Stewart. "We are, I think, going to do very very well."

And that is more than a wish; it's a necessity. The company lost nearly $16 million last year and has posted a $35 million loss so far this year. If this is a make-or-break moment, Stewart is facing it with a flourish. She claims 37 million people follow her various enterprises, from her cooking show (in its fifth year) to her books -- all 69 of them, and counting.

Stewart's latest publication, "Dinner at Home," hit the bestseller list the first week it was out. Her fans can't get enough of all things Martha, and legions of them show up at book signings around the country. A few weeks ago she signed 600 books at a Williams-Sonoma in Philadelphia.

There are also, of course, the magazines -- a variety of titles, led by Living. But most important to the bottom line is the "stuff" -- the products Stewart sells in more than 5,000 retail stores in the United States and overseas: everything from dog dishes to glitter kits. She told us she sold three million jars of glitter after she taught Jay Leno how to "glitter by number."

'I Plan to Be No.1'

This is Stewart's second year selling crafting products, including crafting tools, stickers and paper goods. It's a business she sees as important to her company's future.

"Crafts are a $32 billion industry," said Stewart. "There is no one standout brand in crafting, and we are aiming to be that brand with this amazing assortment of fantastic crafts. And I plan to be No. 1."

Of course, Stewart herself is a famous "crafter," and says she gets a kick out of creating things that eventually end up in her books, magazines and television shows. So is there any difference between the woman, Martha Stewart, and the brand? Does she try to separate the two?

"No," she replied, laughing. "I don't try to separate it all. I -- I try to do as much as I can, wherever I am. So, at the farm, I'm always thinking of some new project, some new thing I can do."

We pushed: Is there nothing she keeps just for herself?

"There are pieces, but they're concealed at work. And they're concealed at home. Does that make you feel better?" she asked, with the merest hint of annoyance.

Stewart is not particularly warm and fuzzy. Nor, she says, is she lonely or unhappy. She is passionate about what she is interested in: both engaged and engaging. She can be funny. Even about herself. She says she is a teacher and there is nothing she seems to enjoy quite so much as explaining how to do something. But one does get the feeling there is only one way to accomplish most tasks: her way. She is rarely still.

An early-morning visit to Stewart's immaculate, 150-acre working farm in Bedford, N.Y., (Ralph Lauren lives next-door), with its three donkeys, five horses, three geese and 200 chickens, including egg-layers, establishes her dedication to all things domestic. She's planning to add cows to her stable as she has an idea about a cheese she wants to produce. She proudly showed off her mulching piles. Her gardens. There seems to be no end to her projects or her enthusiasms.

But there are rules. No outdoor shoes are permitted inside, lest the hardwood floors be damaged. That includes the home gym (although sneakers are permitted for the workout). Martha keeps five pairs of sneakers neatly lined up at the gym door. It takes 12 staffers to work the farm, and her morning meeting with them the day we were there included her instruction that every single tree on the property -- remember it's 150 acres -- needed to be tied, just so, before the winter. "You get the stake, cross it and go around the stake twice and tie it so that if the tree starts to grow it will not get choked."

She didn't say, "or else" but she didn't need to.

Philanthropy Inspired by Mother

Her kitchen is just what you'd expect -- bright, well-organized (she let us poke through all the drawers!) and welcoming. There are two bowls of farm eggs on the counter, a large bowl of fruit, little onions from the garden.

We were invited to a breakfast of scrambled farm eggs and fruit prepared by Laura Acuna, who told us she has worked for Stewart for 22 years. She is clearly devoted. In fact, despite Stewart's reputation for being tough on those who work for her, there are many among her staff who have been with her for decades, including her publicist, Susan Magrino, who has worked with Stewart since her first book was published 27 years ago.

Last year Stewart committed herself to a new venture. Not a business venture, but a philanthropic one: the Martha Stewart Center for Living at Mount Sinai Hospital. It is a facility devoted to helping those who are getting old and those who care for them. It was inspired by Stewart's mother, Martha Kostyra, a favorite guest on her television show, who was 93 when she died two years ago.

"It is a place where -- about 2,700 patients come on an outpatient basis, from the neighborhood -- to get both medical advice, examinations, advice about diet, nutrition and exercise. It is kind of a home away from home for many, many of the patients," Stewart said.

We asked whether Stewart knew her mother was proud of her. She paused.

"About a year after she died," Stewart said, "I was cleaning my shelf where I keep my pocketbooks. And I remember being handed this brown pocketbook. I looked inside, and written in gold inside was a beautiful message from my mother telling me how proud she was of my accomplishments. I'd never seen it before. I 'd never thanked her."

Stewart said she sat on the floor and cried.

But tears are not shed often or easily, despite tough times. Like most media companies, Stewart's has been hard hit by the nation's economic woes. But the economic hit that Martha Stewart Living Omnimedia has taken in the recession is only the second daunting obstacle Stewart has faced in the past five years. You may have heard of the first.

Her high-profile trial and eventual imprisonment for lying under oath was hard to miss. At the time, she was adamant it wouldn't destroy her, declaring on the court house steps, "I'll be back." But in the wake of what she refers to as her "legal mess," the company's losses topped $59 million in 2004 and a whopping $75 million the next year.

'I Was Pissed'

Did she ever think there was a danger that her company would go under?

"Not really," she said, "'cause I'm an optimist. I knew we had a really good thing going. And I really knew that I was not guilty of anything that could possibly harm my company."

But wasn't she scared, after all the hard work she had put in to create her business empire?

"Well, I was pissed. OK," Stewart said. "Pissed that something could actually affect that. The company had nothing to do with anything. But yet, because I am the face and the brand, my person -- it certainly had a -- harmful effect.

"When you are prosecuted in such a way, and a great portion of wealth is dissipated, all I can think, so much, is what I could've done with all of that for the good of mankind. And -- and I hope I can continue."

Stewart said she couldn't put a precise figure on her personal financial losses but contends they were huge.

"It's inestimable actually. Personally, oh, I'm sure -- probably more than a billion dollars, of course. ... And if you add in what the company was worth -- absolutely. And I'm a major shareholder in the company.

Did she kick herself, just a little bit, we wondered?

"How could I kick myself? There are other people to be kicked," Stewart said, laughing. "Enough. Let's get on with-- with the future."

It's that kind of can-do attitude that has helped her steer the company out of danger. By 2007, with Stewart fully engaged, the company turned a profit for the first time since she'd faced her legal woes. But then the world financial crisis hit. Stewart, however, seems remarkably undaunted by the stalled economy, saying the company is poised for major growth.

In fact the company's offices in an old factory building on Manhattan's West Side -- where all her operations have now been centralized -- pulses with activity. Taking up a full city block, the space is bright, white and abuzz. There's the Martha Stewart retail and design operation, the magazines (four of them), the television editing facilities, the test kitchens and the crafting section, the online operation -- and that's just for starters.

The key to further growth -- the company now has sales in the $200 million range -- lies in selling more products. The company took a serious blow with the end of a lucrative deal with Kmart, which guaranteed tens of millions of dollars in sales annually.

But MSLO has responded by finding a new partner in Home Depot. That deal will begin in January as the Kmart deal ends. The company has also signed a new partnership with PetSmart and will continue to partner with Macy's. MSLO is also about to launch a new line of green cleaning products, and this spring will launch a new line of Martha Stewart brownie and cookie mixes.

How Can a Teacher Be Too Perfect?

Of course, Martha Stewart is involved in each product and every deal. Though she dismisses the notion that there wouldn't be a company without her.

"Oh, no, no, that's not true at all," she said. "That is not true at all... We now... own Emeril. Emeril Lagasse. A very strong brand. Emeril is working again as hard as I am, as far as I know, to create complementary product.

But in her heart of hearts, does she believe that if she got hit by a bus tomorrow the company could go on without her?

"Yes, it would. Definitely," she said. "But I'm not gonna get hit by a bus tomorrow... I've already been hit by the bus. Once is enough!"

The bus may have bruised her, but it did not change her in a fundamental way. She remains ever the exacting, impossibly perfect homemaker. This fall on her television show she explained to viewers how she collects the pink gravel from her mile-long driveway in Maine every winter, and stores it for the next year so it doesn't get muddy.

"That beautiful gravel -- expensive gravel I might add -- would disappear in to the Maine mud," she said. "That's a Maine tradition." It is clear she sees herself as a trustee of what is beautiful and refuses to compromise her vision.

It's that kind of over-the top perfectionism that makes Stewart's fans adore her and her critics go crazy -- a criticism, by the way, she doesn't understand.

"Well, how can a teacher be too perfect?" she said. "Oh, I've just -- I can't even -- if I had a teacher who was imperfect, or couldn't speak French when they were a French teacher, or mispronounced things, or -- spoke bad grammar if she were teaching, or he were teaching English, that would not have been a good thing."

Rachael Ray: 'That's Not Good Enough for Me'

This approach to homemaking -- cooking in particular -- lies in stark contrast to a rival domestic diva, Rachael Ray, whose style is far more laid-back. The two appeared on each other's programs recently, and Stewart doesn't mince words when it comes to Ray's cooking skills.

"Well, to me, she professed that she could -- cannot bake," said Stewart. "She -- just did a new cookbook which is just a re-edit of a lot of her old recipes. She -- and that's not good enough for me. I mean, I really want to write a book that is a unique and lasting thing. Something that will really fulfill a need in someone's library. So, she's different. She's -- she's more of an entertainer than she is, with her bubbly personality, than she is a teacher, like me. That's not what she's professing to be."

We asked Rachael Ray for her reaction to Stewart's comments. Does it make her mad?

"Why would it make me mad?" said Ray. "Her skill set is far beyond mine. That's simply the reality of it. That doesn't mean that what I do isn't important too... I don't consider it needling. I really just think she's being honest. She does have a better skill set than I do when it comes to producing a beautiful, perfect, high-quality meal. I'd rather eat Martha's than mine, too."

And that is part of what Martha Stewart still has going for her. She is, even in the eyes of her competitors, the queen. And yet she is a queen who cannot officially rule her own company -- not until 2011, anyway, per an agreement with the Securities and Exchange Commission stemming from her conviction.

So who runs the company? Stewart said Charles Koppleman, the executive chairman, and Robin Marino, CEO and president of merchandising, are in charge. But she is the one with the corner office, and the one who sits at the head of the table during meetings.

"It's actually my table," she joked. "I bought it for the company."

Do they let her sit of the head of the table because they feel sorry for her?

"Nobody feels sorry for me. Believe me."

We read her something Maureen Dowd wrote in the New York Times a few years ago about Hillary Clinton and Stewart.

"Americans like to see women who wear the pants be beaten up and humiliated," Dowd wrote. "People liked Hillary and Martha a lot more once they were broken ... melted into puddles of vulnerability."

Stewart objected.

"I don't think either Hillary, who is the secretary of state of the United States of America, is a broken woman, and I don't think I was a broken woman," Stewart said. "I did what I had to do. And came back right into a company that had not failed. Despite the wishes of some that it would.

Was it humiliating?

"No," said Stewart, "I was never humiliated. I was hurt, and I was sad, but I was never, never broken."

And now she intends to make sure her company isn't broken either.

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