Martha Stewart Living Omnimedia yesterday reported a bigger-than-expected quarterly loss and forecast a wider loss in the current period as its founder's criminal conviction takes a toll on its media and merchandising businesses.

The company, which publishes lifestyle magazines and sells a line of housewares at Kmart stores, reported lower revenue in all its business segments and its shares fell about 2.5 percent.

Martha Stewart Living has been grappling with falling advertising sales at its magazines and the suspension of some of its television shows. Its money-losing e-commerce and catalogue unit will close by the end of 2004, eliminating about 5 per cent of staff.

Martha Stewart, whose flair for baking tarts and organising closets has made her one of the US's most famous businesswomen, was sentenced in July to five months in prison and five months of house arrest for lying to investigators about a personal stock sale.

In a conference call with analysts, its president Sharon Patrick said the company was heartened that Stewart received the lightest term allowed under the law, but noted that uncertainty still surrounds the case and was weighing on advertisers.

Shares of the company were down 3 per cent on the New York Stock Exchange. - (Reuters)