Martha Stewart's image and company are taking a huge hit in the media and the stock market, due to her recent indictment for securities fraud and lying to federal investigators after she sold shares in the biotech company ImClone Systems Inc before the price fell.
Martha recently stepped down as chairman and CEO in hopes of slowing the decline in her stock and sales.
Martha Stewart's decision to step down as chairman and CEO can affect her company in several ways: By stepping down, she may have been able to avert much of the negative attention away from her company and sales will begin to stabilize. This will result in stock prices going up and demand for her product to increase.
If this does not happen, it may result in a decrease of demand for her products. This may result in reduced prices and over supply of her products, which will affect her stock prices and sales, causing her stock to decrease in price and sales numbers to sag.
stewart, mena, SCOTT?!
Martha Stewart
Karl & StewartSharon Patrick, the former Chief Operating Officer was named CEO to replace Stewart. Upon announcement, stock rose 11 cents. This is just what Martha Stewart is hoping for, as a majority shareholder.
Despite the negative press, Stewart has many supporters who will continue to buy her products, read her books and articles and watch her programs.
References
Emling, S. (2003, June 6). Stewart fights back. Atlanta Journal-Constitution.com. Retrieved June 6, 2003 from http://www.ajc.com/business/content/business/0603/06stewart.html.
Picchi, A. (2003, June 9). An understudy steps ups amidst Stewart's troubles. LA Times.com. Retrieved June 9, 2003 from http://www.latimes.com.