Martha Stewart Appointment of Dienst as CEO Signals Cuts

Martha Stewart Living Omnimedia Inc. named former metals-industry executive Daniel Dienst to lead the company, going outside the media business for a manager with operational experience who can reshape the unprofitable company.

Dienst, the former chief executive officer of scrap-metal recycler Sims Metal Management Ltd., will take the same position at Martha Stewart Living, the home-decor retailing and publishing company said yesterday in a statement. Dienst, 48, had been at Sims and its predecessor company Metal Management Inc. from 2003 to June of this year. He joined the Martha Stewart Living board in August.

The company has been trying to recast itself as a merchandiser after years of losses as a media business. Bringing in Dienst, who has little retail experience though plenty in fixing up companies, means Martha Stewart Living will probably be cutting more costs, said Mike Kupinski, an analyst with Noble Financial Capital Markets.

“It was at first a little shocking, but then completely made sense,” Kupinski said. “He’s a restructuring kind of guy. He has a history of coming into companies, fixing them up and selling them.”

The new CEO is arriving at a company at a crossroads. New York-based Martha Stewart Living suffered a setback to its merchandising strategy this month. The company scaled back an agreement with J.C. Penney Co., amending it to run through 2017 instead of 2021, in response to a lawsuit from Macy’s Inc.

Macy’s Suit

Macy’s, the second-biggest U.S. department-store chain, filed suit in January 2012, saying it had the exclusive right to sell Martha Stewart Living-branded goods in certain categories, including bedding and cookware. Macy’s case for damages remains before the court.

Sales in Martha Stewart Living’s publishing business, meanwhile, have declined from a year earlier for seven straight quarters on sluggish advertising sales.

Martha Stewart Living said last year that it would shut down its Whole Living magazine and turn its Everyday Food title into an online publication. The company also began retooling its broadcast division to focus more on Internet services, including AOL Inc. and Hulu LLC, rather than traditional television.

“Dan has specific expertise helping companies run efficiently and productively,” Stewart, the company’s non-executive chairman, said in the statement. “I look forward to working with him to strengthen and further expand our brand and create new opportunities to significantly grow.”

Perfectionist Chairman

Dienst will be operating under Stewart, the home-decor perfectionist who holds almost 90 percent of voting rights at the company. Stewart, 72, stepped down as CEO when she went to prison for obstructing justice in an insider-trading probe. Her sentence included a ban from leading her company for five years -- a deadline that has since passed.

Dienst replaces Lisa Gersh, who announced plans to leave in December after only five months on the job. Stewart extended her own employment through 2017 as part of an agreement last year.

Sims announced Dienst’s retirement in February. The company credited him with completing two mergers, improving safety conditions and establishing operations in China.

Martha Stewart Living rose less than 1 percent to $2.40 yesterday at the close in New York. The shares have dropped 2 percent this year.

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