Crafty Martha Stewart pursues scrapbooking

The Wall Street Journal

On a recent episode of her daytime television show, Martha Stewart set out to make a decorative songbird out of wool and felt. It didn’t go smoothly. She struggled to wind the wool into a head and strained to insert wire legs. “This is a tough little bird,� she told viewers, frowning.

Now Stewart hopes a high-stakes crafts project for her company will be less exasperating. Martha Stewart Living Omnimedia Inc. is rolling out Tuesday a line of more than 650 products aimed at the legions of hobbyists who assemble elaborate scrapbooks.

It’s the company’s biggest merchandising initiative since it teamed up with Kmart stores in 1997, and it represents a strategic shift toward licensing its brand and selling via the Internet.

What does the domestic-arts maven see in a dowdy industry where merchandise is sold in cluttered stores, stacked floor to ceiling with pipe cleaners, Styrofoam balls, glue sticks, beads and fake flowers?

“Paper crafts may sound like a quaint pursuit,� says Chief Executive Officer Susan Lyne. “But it’s actually a rapidly growing business.�

Preserving photographs and memorabilia in decorated albums — enthusiasts call it scrapbooking — has grown into a nearly $3 billion industry, according to the Craft & Hobby Association.

Martha Stewart Living hopes to ring up enough sales of $1.69 colored markers, $4.99 bottles of glitter and other merchandise to generate $100 million of annual sales within three years.

The rollout of Martha Stewart Crafts is part one of a planned merchandising blitz that the company hopes will return it to profitability and deliver long-term growth.

Although Martha Stewart Living posted revenue of $288 million in 2006, up 36 percent from a year earlier, it had a loss of $17 million. It hasn’t turned a profit since 2002, the year Stewart became entangled in a securities-fraud investigation that resulted in her five-month imprisonment on an obstruction-of-justice charge.

Stewart’s high-profile media businesses have been the company’s engine. But both magazines and television face serious long-term challenges, including the migration of advertisers to the Internet and a declining audience for daytime television.

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