It seems pretty clear based on current circumstances that Martha Stewart and Kmart will be splitsville when the contract between the two parties expires in January 2010. But, where will that leave Ms. Stewart's Living Omnimedia (MSLO) business that now receives roughly 80 percent of its licensing revenue from sales of the Martha Stewart Everyday line in the mass merchant's store and on its website?
In the past couple of years, MSLO has reached separate deals with Macy's, Michael's, Costco, Lowe's and 1-800-flowers to begin bridging the dollar gap it may face should the Kmart deal not be renewed.
Susan Lyne, president and chief executive at MSLO, recently told attendees of the Bank of American Consumer Conference, "While we don't know if we will be at Kmart, I think you can assume that we will have a mass market partner and we will continue to play in that space."
When asked what MSLO was looking for in a new mass partner, Ms. Lyne said, "If you look at all of our new licensing partnerships, they are all with first-in-class retailers. So what is really important is for us to be with someone who is investing in their business and who will really work with us to grow a product line. Costco, Macy's, all of these people have been really terrific about helping us to understand their customer and making sure they invest along with us in the success of these new launches."
Discussion Questions: Where do you think Martha Stewart will go for a mass merchant partner when the deal with Kmart expires? Will the brand just carry over its Everyday concept or do you see a major change for the brand after the current deal with Kmart expires?