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Kmart and Martha work out new deal

TROY, Mich. — Kmart and Martha Stewart Living Omnimedia have forged a new agreement that extends Kmart's exclusive relationship with the Everyday brand to 2009, amends some minimums demanded under a previous contract, and will expand the brand into furniture.

The revised agreement extends the Martha Stewart Everyday distribution agreement by two years. It also eliminates minimum guarantees by product category, although the aggregate minimum guarantee in the contract remains the same, the parties said in a joint statement. The companies also said that Everyday will more into a new product category: ready-to-assemble furniture.

In addition, Kmart also said today that it will withdraw the February lawsuit it filed in bankruptcy court against MSO IP Holdings Inc. At the time, Kmart claimed MSO was demanding excessive royalties. MSO responded that Kmart was attempting to shave $4.5 million from the $52 million it owed on sales of Everyday merchandise during fiscal year 2003 and wanted to pare its advertising in MSO media properties by $1 million to $2 million.

Today's announcement did not clarify how those issues had been resolved.

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