More Bluelight Blues?

Martha Stewart Living Omnimedia Inc. could end its role as a major merchandise supplier to Kmart Corp. (Troy, Mich.), as the discount retailer's board considers filing for bankruptcy, The Wall Street Journal reported on Wednesday.

Stewart's New York-based corporate empire, which includes magazines, television and merchandise, could pull out of its deal with Kmart if the beleaguered No. 2 U.S. discount retailer files for Chapter 11 bankruptcy protection, the newspaper reported. Martha Stewart is Kmart's most important supplier, the paper added.

Kmart's board of directors met on Tuesday to discuss financial options, perhaps even bankruptcy. Kmart, already in the midst of a $2 billion restructuring, has said that it may need additional financing from banks after months of weak sales, particularly after the Christmas shopping season.