Martha Stewart Living Omnimedia Inc. (MSO) soared 40 percent Friday after the company's namesake founder received a lighter-than-expected sentence for lying to federal prosecutors.
Martha Stewart (search), 62, who parlayed a catering business into a media and merchandising powerhouse, was convicted in March for lying about a suspicious stock trade.
U.S. District Judge Miriam Goldman Cedarbaum sentenced Stewart to five months of prison and two years of probation. She was also fined $30,000. Stewart could have been sentenced to up to 16 months in prison.
"It's very light," said Peter Cohan, a management consultant and company watcher. "It's a vote. People like her and they're happy she won't spend too much time in prison."
Martha Stewart Living shares were up $3.46 at $12.10 in late trade on the New York Stock Exchange (search), their highest level since her conviction in March.
Kmart, which has exclusive rights to the Martha Stewart Everyday brand in housewares and other products, reiterated its loyalty to Martha Stewart's company Friday, the Associated Press reported.
Analysts have long said there would be no reason for Kmart to drop the Martha Stewart brand. Kmart needs such brands to distinguish itself from Wal-Mart Stores Inc. and Target Corp., and Martha Stewart products have a reputation for quality and remain popular with consumers.
C. Britt Beemer, chairman of America's Research Group, said his surveys have shown that 80 percent to 85 percent of people who previously bought Martha Stewart products continue to do so.
"What everybody's missed in this discussion is that the Martha Stewart design team is clearly one of the best in America at knowing the American female," he said. "As long as they can keep producing these winners, Martha's company will be able to maintain a certain level of sales success."
Stewart's surrender to authorities was delayed to allow her attorneys to appeal her conviction.
Stewart was convicted of lying to prosecutors related to her 2001 sale of ImClone Systems Inc. (IMCL) stock, which saved her $51,000. But the ensuing debacle wiped off $400 million, or about half, of the market capitalization in the company she founded.
She has since resigned as an officer of the company, but remains its controlling shareholder and founding editorial director.