Martha’s Kmart Future Foretold
By George Anderson
It doesn’t take a crystal ball, tealeaves or cards to see that Martha Stewart’s future with Sears Holdings is not likely to last.
The recent announcement from Macy’s that it would begin carrying an exclusive line of upscale Martha Stewart home goods beginning in 2007 along with a failure to put together a deal to expand the Everyday Living line from Kmart stores to Sears suggests that Ms. Stewart’s future will not be with Edward Lampert and Sears Holdings.
Susan Lyne, CEO of Martha Stewart Living Omnimedia Inc., said the deal with Macy’s would give the brand a nationwide department store presence while providing other opportunities for growth outside of the core Martha Stewart Collection line.
“Macy’s also expects to sell other Martha Stewart-branded products on a nonexclusive basis,” she said.
This aspect of the deal, reports MarketWatch, will allow Martha Stewart Living Omnimedia to develop other products in areas including home and garden products that would be carried through chains such as Home Depot.
The Martha Stewart Collection is expected to generate initial annual sales of around $400 million or 10 percent of Macy’s revenues from home goods.
As to whether their still remains a possibility that Ms. Stewart’s company can work out a deal with Kmart, Ms. Lynne said, “We have nothing new to report on any negotiations with Kmart. What I have said always was that we would do a deal if we felt that it was in the long-term interest of our company and our shareholders, and the Macy’s deal is that.”
Ms. Stewart and Kmart’s fortunes have been closely intertwined. The Everyday line generates about $1 billion in sales annually for Kmart while 80 percent of Ms. Stewart’s merchandise sales come from the retail chain.
Moderator’s Comment: What will it mean for Kmart if the retailer is not able to work out a deal for the Martha Stewart
Everyday line beyond the current contract? How does the chain prepare for a future without a brand that it is so closely associated with? –
George Anderson – Moderator