Week 1 Case Study
Pg. 34, Pg. 41 & Pg.44
January 13, 2012
Martha Stewart’s Loss Reputation
Martha Stewart is a well-known and respected woman who represents the successful women that made it on their own in today’s society. Not only is she a stock broker, but her fashion, style, good taste, TV show and her line of house wares is what got her the popular publicity among many. When allegations against Martha Stewart surfaced many questioned her ethical actions. Due to allegations her profit reduces and the MSO dropped.
Martha Stewart’s main target consisted of women who were attracted by her charisma. Let’s face it Martha was good at what she did, and women wanted to be like her by purchasing her products. Martha’s customers trusted her products and believed in its purpose. When the accusations rose against Martha, many started to question her ethical actions and wondered if they knew the real Martha and what she stood for. As days passed Martha continued to take the highlight of top new, at the same time her revenue reduced tremendously. As the profits went down, investors were getting ready to pay less and less for the shares of MSO.
After doing some research on MSO financial statement I realized that MSO revenue has rapidly increasing before her reputation was harmed. In 1999 MSO total revenue was $232,314 and in 2001 it was $295,627. You can defiantly see the increase in the numbers. Even though the economy and MSO competition I would assume that the revenue would keep on rising if Martha’s reputation weren’t harmed. According to MSO financial statements, even though the MSO total revenue dropped to $212,433 in 2005, but by 2007 it was already up to $327,890. Based on total revenue predictions I would assume that the same would happen with the stock price. If Martha’s reputation was not harmed the stock price would have kept on increasing.
Regardless of legal actions, in my view Martha...