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Martha Stewart Expresses Doubts About Kmart

Tells Newsweek that 'a company in reorganization poses problems for us'

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Martha Stewart ended her silence regarding the precarious state of her retail business partner, Kmart. The housewares designer, who sells her Everyday line of products exclusively in the Troy, Mich.-based mass merchant's more than 2000 stores, told Newsweek magazine that she's openly concerned about her future with Kmart, which may be on the brink of filing for bankruptcy.

“We haven't experienced any difficulties yet,” she says in the current issue. “But a company in reorganization poses certain problems for us in terms of our brand and our growth rate.”

Kmart has an exclusive deal with Stewart to sell her line of products until 2008. As long as Kmart is able to meet an escalating series of guaranteed payments to her company, Stewart can't take her products anywhere else. “If they do declare bankruptcy, it's up to them to tell us if they want us in the mix of not,” Stewart says in the Jan. 28, 2002, issue of the magazine. Other retailers are reportedly interested in the brand, including rival discount mass merchants Target and Wal-Mart.

The magazine reports that the specter of a declining Kmart dragging down her brand prompted Stewart to call Kmart ceo Chuck Conaway (who was stripped of the store's chairmanship last week) and offer her “ideas and creativity” for reviving the chain. When asked if Conaway would be around long enough to take her advice, Stewart would only say, “Who knows?”

She said she feels Kmart's strategy to take on Wal-Mart by cutting prices was a “mistake.”

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