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Martha Stewart’s Macy’s deal strains Sears ties

Martha Stewart’s deal to sell merchandise to Macy’s department stores raised questions about the future of her relationship with Sears Holdings Corp., Sears Chairman Edward Lampert said Wednesday.
/ Source: Reuters

Martha Stewart’s deal to sell merchandise to Macy’s department stores raised questions about the future of her relationship with Sears Holdings Corp., Sears Chairman Edward Lampert said Wednesday.

Sears Holdings, which has sold Martha Stewart Everyday merchandise at its Kmart stores for years, decided not to carry the brand in its Sears chain for fear that the deal would not be renewed when it expires in four years, and the retailer would be forced to remove the goods.

“If we put a product into Sears, we don’t want to have to pull it out in a year, or two years, or three years,” Lampert told reporters following the retailer’s first annual shareholder meeting here. “We don’t want to do that only to have it yanked away.”

Martha Stewart Living Omnimedia Inc. said last week it was launching an exclusive line of home products in Macy’s stores for fall 2007, a move analysts saw as an effort to move more upscale.

“What they did with Macy’s probably makes sense for them, but it also shows you where their head is at,” Lampert said.

Sears Holdings was formed last year when Kmart bought Sears, Roebuck & Co. The company has said from the start that it wanted to share exclusive brands between the two chains, and has added Sears staples such as Craftsman tools and Kenmore appliances to Kmart stores.

But Martha Stewart Everyday was conspicuously absent from the brand-swapping mission.

“If we thought it was in our best interest to put Martha Stewart in Sears stores, which contractually we have the right to do, we would do it,” Lampert said.

The contract has been problematic. Lampert called it “not that great,” and has made no secret of his wish to renegotiate the terms, particularly requirements that Kmart meet certain minimum sales targets that he considers too high.

Lampert said the contract restricted Stewart’s company from selling to some competitors, but Macy’s was not among them. The deal predates Kmart’s purchase of Sears, which competes more closely with Macy’s than Kmart does.