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Extra! Extra! Martha speaks to workers
Stewart talks to employee faithful at New York headquarters; company stock tumbles.
March 8, 2005: 2:54 PM EST
By Krysten Crawford, CNN/Money staff writer
Martha Madness? A greeting from a New York City bakery near Martha Stewart Living's offices.
Martha Madness? A greeting from a New York City bakery near Martha Stewart Living's offices.
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Martha's Odyssey
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Martha Stewart addresses her employees.
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Part two of Martha Stewart's speech to her employees.
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Since Martha got out of prison, the press has followed her every move. CNN's Jeanne Moos has been tracking both Stewart and the media.
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NEW YORK (CNN/Money) - The Martha Makeover has kicked into high gear.

Stewart visited her company early Monday afternoon to spread the message to employees, fans and investors that she's back and that Martha Stewart Living Omnimedia (down $2.03 to $25.94, Research) faces a bright future despite heavy losses and a recent sell-off in the company's stock.

"It's really wonderful to be back," declared Stewart, looking happy and wearing a dark brown skirt and blazer, on her fourth day out of prison.

Stewart, 63, was released early Friday morning from a minimum-security prison in West Virginia, where she served five months on felony charges related to a personal stock sale. Stewart has insisted all along that she did nothing wrong.

Noticeably missing during Stewart's appearance: the ankle bracelet that she must wear around-the-clock while under house arrest for the next five months. Stewart is not permitted to go outside of her Bedford, N.Y., residence, except for up to 48 hours a week for work or other special circumstances.

She took advantage of that exception on Monday.

"I've always felt that life should be an adventure, that every day should be important " Stewart told company workers Monday. "There can be no doubt that the last three years have certainly been an adventure for me and for all of you. Though it was stressful -- very stressful -- I can say that I don't regret everything."

She praised the women inmates she met in prison and painted a bright future for Martha Stewart Living Omnimedia. She lost her composure a bit at the end of her talk, when she repeated her gratitude to supporters and repeated how glad she is to be back.

Stewart's speech was remarkable not just because it was her first official public appearance since going to prison in October, but also because executive speeches to employees are rarely, if ever, broadcast around the world.

Such is the spectacle, however, that has surrounded Stewart since her legal ordeal began in 2002. And the drama shows no signs of quieting down anytime soon.

Everything about Stewart seems to be news these days -- from the knit poncho she wore when she was released from prison early Friday to her stroll outside her upstate New York home to feed her horses -- has been carefully documented and telecast around the world.

And that, apparently, is just the way Martha Stewart Living wants it.

The company had sent out a media advisory announcing Stewart would visit -- and invited television crews to broadcast the event. Stewart founded and led the lifestyle and publishing company until her 2003 indictment on obstruction of justice charges.

It's hard to tell who's feeding the frenzy -- the media or Martha Stewart Living.

Stewart sprung, investors sell

The last time Stewart made a televised appearance at her company's offices was six months ago, when she announced she had decided to go to prison. She'd been convicted and sentenced for lying to federal investigators about a personal stock sale, but the trial judge had let her remain free pending the outcome of her court appeal.

Partly because of heavy financial losses at her company, Stewart chose to serve her time early in the hope of putting the ordeal behind her and her New York-based company.

Marketing experts say rarely has a company brand been tied so closely to one individual. Martha Stewart Living, which publishes a monthly magazine of the same name and sells home furnishings mostly through Kmart stores, has suffered because of the damage the criminal case did to Stewart's reputation. Advertisers fled, an Emmy Award-winning arts and crafts show starring Stewart was pulled, and Kmart sales have fallen.

The company has shed about a fifth of its work force, to about 475 employees today, in the last three years.

The company last month posted its second consecutive annual loss since going public in 1999. Even in the face of heavy losses, shares in Martha Stewart Living more than quadrupled while Stewart was behind bars.

But after hitting a 52-week high in late February, the stock has tumbled 25 percent, including big declines Friday and Monday. For Stewart, the two-week slide has cost her family about $270 million on paper. Stewart has transferred stock in the company to her daughter, a stake now worth about $830 million.

To rehabilitate Stewart and its business, Martha Stewart Living needs a bold public relations campaign, say marketing experts.

"I think they've got to be aggressive and to make Martha more accessible," said Brit Beemer, the founder of marketing firm America's Research Group, on the eve of Stewart's prison release last week. "America has got to know that she's not the same Martha she was before."

At Martha Stewart Living, she doesn't have the official power she used to have. She quit her posts as chairman and CEO after being indicted in June 2003.

Stewart is now founding editorial director, a nonexecutive post she's likely to retain at least until a lawsuit by securities regulators seeking to bar her as an officer or director of her company, or any other public company, gets resolved.

Susan Lyne, a former ABC network executive, took over as CEO late last year. Thomas Siekman, a lawyer and former executive at Compaq Computer, serves as chairman.

For more on Stewart's release, click here.

For more on Stewart's saga, click here.  Top of page


Martha Stewart Living Omnimedia Incorporated
Martha Stewart
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