Kmart and Martha Make A Deal

Apr 27, 2004
George Anderson

By George Anderson

As has been widely reported, Kmart and Martha Stewart Living Omnimedia have reached an agreement that will revise and extend the term of the contract for Martha Stewart’s Everyday
line through 2009.

Kmart also agreed to drop a suit it brought against Martha Stewart Living Omnimedia for overcharges on royalties.

The royalties issue was at the heart of the dispute between the parties. The previous contract included language guaranteeing minimum royalties for sales in individual product
categories. The new deal is said to simplify the terms of royalty payments.

Ms. Stewart’s recent conviction on federal securities charges is widely believed to have given Kmart the upper hand in its negotiations.

Richard Hastings, retail sales analyst at Bernard Sands, told Newsday it was a deal that had to be made. “It is good for Martha Stewart Living Omnimedia because their Kmart relationship
is such a big part of the business, especially now since the ad revenues and TV appearances are all taking quite a beating,” he said.

Moderator’s Comment: What are your thoughts on the announced deal and relationship between Kmart and Martha Stewart?

Revenue from Ms. Stewart’s deal with Kmart accounted for 22 percent of revenues for Martha Stewart Living Omnimedia. This was up from 17 percent the year
before and is certainly a reflection in the drop-off in other areas of the business during the lead-up to her trial and ultimate conviction.

George Anderson – Moderator

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