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Martha Seek Mass Market Partner after Kmart

New York —Addressing her second analyst conference in as many days, Martha Stewart Living Omnimedia's chief elaborated on her March 10 assertion that the brand would live on in the mass market after its exclusive contract with Kmart expires in January 2010.

“Right now we do not believe Kmart is our likely partner going forward,” president and ceo Susan Lyne said during the Bank of America 2008 Consumer Conference here. “However, as of January 2010 we can be in any other mass retailer,” and the company is free to pursue new deals now, she added.

Lyne noted that its other channel exclusives are with first-in-class retailers (Lowe's, Macy's and Costco) and indicated the company believes it will receive more floor space and better promotion if it signs another exclusive in the mass market.

She did caution against expecting another Kmart-sized contract, which spans multiple product categories and in its heyday approached $1 billion in annual sales.

“That was a landmark deal,” she said of the Kmart agreement.

As for a new mass market partner, “What is important for us is to be with someone who is investing in their business,” she said.

Although Kmart's obligations have begun winding down, the retailer still accounts for 80% of MSLO licensing revenues, cfo Howard Hochhauser told the audience. As Kmart's minimums fall off, that revenue stream will decline from $65 million to about $20 million, he added.

A day earlier, at the Bear, Stearns & Co. Inc. Media Conference, Lyne said the new Martha Stewart Collection, which launched this past September as a Macy's exclusive, “hit our sales targets” despite a difficult environment in retailing generally.

Based on early performance, Lyne speculated that the collection should reach its goal of accounting for 10% of Macy's home sales over the next two years.

MSLO is also exploring media and merchandising opportunities outside the United States. Stewart's television program is broadcast in 60 countries, and “she has more awareness around the world than people know,” Lyne said.

The market in China appears to be most interested in Stewart's home decorating and wedding expertise while in India it's the Whole Living concept, she added.

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